The test as to whether or not an illegal activity is assessable is as Rowlatt J summarised the issue in Mann v Nash [1932] 16TC523 at page 528:

‘Is this a trade within the meaning of Income Tax Acts or is it not?’

In deciding whether or not an activity is a trade, you should follow the guidance at BIM20050 onwards.

There is only a limited amount of guidance from the Courts on the type of illegal activities that amount to a trade:

smuggling alcohol for sale is a trade (Lindsay, Woodward & Hiscox v CIR [1932] 18TC43).

operating illegal gaming machines is a trade (Mann v Nash [1932] 16TC523).

In addition there are also a number of statements made in passing:

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