BIM53251 - Commodity transactions
Case I Schedule D or Capital Gains?
Transactions in commodities may take the following forms
- Actual purchases and sales of a commodity.
- `Futures' contracts where there is frequently no intention of supplying or taking delivery of the commodity on maturity of the contract.
- A combination of (a) and (b) above.
Where a person enters directly into transactions involving the
purchase and sale of a commodity, the profit will normally fall to
be assessed under Case I of Schedule D as profits from `an
adventure or concern in the nature of trade' (see
CIR v Fraser [1942] 24TC498, and
Wisdom v Chamberlain [1968] 45TC92).
Profits from transactions in commodity futures were, before 6
April 1985, normally assessable under Case I or Case VI of Schedule
D (see
Cooper v Stubbs [1925] 10TC29, and
Townsend v Grundy [1933] 18TC140). The question of
whether Case I or Case VI was appropriate was influenced by the
number and scale of the transactions and the degree of organisation
involved.
Profits arising on or after 6 April 1985 from transactions in
commodity futures on a `recognised futures exchange' are, unless
they fall within Case I of Schedule D, treated as chargeable gains
(see CG56004). Accordingly, with effect from 6 April 1985, the Case
VI option is no longer available for such transactions.
