BIM20095 - Trade: general: judicial guidance

The Tax Acts do not provide any direct statutory guidance on the meaning of 'trade' apart from the limited definition in ICTA88/S832 (1) which brings in every 'trade, manufacture, adventure or concern in the nature of trade' and ITA/S989 which ‘includes any venture in the nature of trade’ (see BIM20060 onwards). The word therefore takes its ordinary meaning, subject to the extra help given by ICTA88/S832 (1)and ITA/S989.

In Smith Barry v Cordy [1946] 28TC250 Scott LJ, who was considering what is now Section 832 (1), said at page 258:

“As the definition includes the very word trade without qualification, that word must be used in its ordinary dictionary sense and the other words must necessarily be intended to enlarge the statutory scope to be given to the word trade in Schedule D”.

This is authority for the view that 'trade', for tax purposes, includes situations which fall short of being full blown, unquestionable, trades (see BIM20065).