This guidance note considers the application of the badges of trade in specific situations. For more on the badges of trade, see the Meaning of trading guidance note.
The application of the badges of trade is also considered in ‘You’re trading!’ by Mark McLaughlin in Taxation, 30 June 2011, 8 and ‘Got the badge’ by Sarah Saunders in Taxation, 16 June 2016, 14.
Remember, the badges of trade do not apply for VAT purposes. Instead, it must be determined whether there is a business. This is known as the ‘business test’ and the principles come from case law. Guidance can be found in HMRC Brief 10/22. It is possible for an individual to be trading for income tax purposes but not be able to register for VAT as they are not running a ‘business’ for VAT purposes.
After deciding whether the taxpayer is running a business for VAT purposes, consideration should be given to the type of supply and whether the business needs to register for VAT. An overview of these areas
Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+™
Access this article for free with a 7 day trial of Tolley+™ Guidance and benefit from:
- Expert practical tax guidance
- Ready-made templates, step-by-step-guides, interactive flowcharts and checklists
- The latest news updates, insights and analysis
Popular Articles
BPR ― trading and investment businesses
BPR ― trading and investment businessesIntroductionThe basic qualification rules for business property relief (BPR) are illustrated in the Flowchart ― trading or investment business for BPR purposes.For an overview of BPR, see the BPR overview guidance note.Relevant business propertyThe main
Exemption ― overview ― items exempt from VAT in the UK
Exemption ― overview ― items exempt from VAT in the UKVAT exemption: list of supplies exempt from UK VATThe goods or services that are exempt from VAT are listed under various group headings within VATA 1994, Sch 9, Pt II.It is important to remember that not all supplies that come within a heading
VAT registration ― artificial separation of business activities (disaggregation)
VAT registration ― artificial separation of business activities (disaggregation)This guidance note should be read in conjunction with the VAT registration ― compulsory guidance note and is relevant to persons established or resident in the UK. Persons that are not established or resident in the UK
