B1.404 Profit motive not decisive
The question is whether or not a trade is or was being carried on and, once that question is answered in the affirmative, there is liability to tax on any resulting profit. This is irrespective of whether the trading activities were directed to the making of the profit and irrespective of the purpose to which the profit is applied.
No intention to make a profit
A trade may be carried on for tax purposes even though there is no intention to make a profit.
Thus, in considering the question whether or not the Council of Law Reporting for England and Wales could be considered to be carrying on a trade or business, Lord Coleridge CJ said1:
'I should have thought it capable of strong argument that they carried on a trade, because it is not essential to the carrying on of a trade that the persons engaged in it should make, or desire to make, a profit by it. Though it may be true that in the great majority of cases the carrying on of a trade does, in fact, include the idea of profit, yet the definition of the mere word 'trade' does not necessarily mean something by which a profit is made.'
In this case the court held that the Council was carrying on a trade or business and was therefore exempt from the former corporation duty under the Customs and Inland Revenue Act 1885 s 11(5) (repealed). There are dicta to the same effect inCarnoustie Golf
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