The purpose behind a transaction or transactions may be to get a
tax advantage through, for example, establishing a loss, which can
lead to repayment of tax paid at source, or can be set against
other income, which would otherwise be taxed. The intention to seek
such a fiscal 'profit' does not support a finding that the
transaction was a trading transaction, or that an asset was trading
stock, or that the person was carrying on trade for tax purposes.
The transaction must have a commercial purpose if it is to be a
trading transaction.
For example, see Overseas Containers (Finance) Ltd v Stoker
[1989] 61TC473 and the remarks of the vice chancellor at page 536C
onwards. The question of fiscal purpose is also discussed at
BIM20105 onwards.
