Nicholas Henderson v The Commissioners for HMRC
Decision date: 8 March 2023
Neutral citation: [2023] UKFTT 281 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned whether Mr Henderson’s execution-only share dealings (c.194 disposals over 2015/16–2017/18, modest funds employed and about 1–2 hours’ work a day) amounted to a trade such that trade loss relief could be claimed. The Tribunal found the overall factual picture — number/frequency of transactions, limited organisation, lack of systematic commercial planning and the way losses were treated — consistent with management of a personal investment portfolio rather than trading. The appeal was dismissed and the trade loss claims were refused.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The tribunal acted on the principle that the prima facie presumption that speculative dealings in securities are not trading can be displaced only by facts showing an overall picture consistent with trading; the so‑called badges of trade are useful indicators but not determinative. Relevant factors include frequency and number of transactions, time devoted, organisation and planning, and the commercial response to losses; applied here, those factors pointed to portfolio management, not a trade.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: high
The tribunal noted that managing a portfolio for growth (as opposed to for dividends) does not, by itself, convert investment management into trading, and that mere aspirations or hopes for profit without concrete planning or a systematic approach are insufficient to establish a trade.