Badges of Trade

Badges of Trade (UK)

The KEY Badges of Trade are:

  • The subject matter of the transaction.
  • The length of the period of owner-ship. The quick resale of property is likely to indicate a TRADE.
  • The frequency or number of similar transactions by the same person. Repeated transactions of the same item is likely to indicate TRADE.
  • Supplementary work, improvements or marketing. Taking additional steps to make it more attractive to a buyer is likely to indicate a TRADE.
  • The circumstances responsible for the realisation. A forced sale to raise cash would NOT indicate a TRADE.
  • The motive. A profit motive is a STRONG indicator of a TRADE.

The following additional Badges should also be considered:

  • Finance. Taking out a loan to finance the purchase of items and using the proceeds from sale to repay the loan, indicates a TRADE.
  • Method of acquisition. Inheriting or being gifted assets that are then sold, is NOT an indication of TRADE.
  • Existence of similar trading transactions. If the transactions are SIMILAR to an existing trade of the individual, then this is indicative of TRADE.

IMPORTANTLY, no single BADGE OF TRADE is decisive in determining a trade or not. All factors of a particular circumstance need to be considered.