Income Tax (Earnings and Pensions) Act 2003 Schedule 5 paragraph 17

Excluded activities: wholesale and retail distribution

Paragraph 17 of Schedule 5 supplements paragraph 16(b) by defining wholesale and retail distribution trades and setting out how to determine whether such a trade is an "ordinary" trade of wholesale or retail distribution for the purposes of the excluded activities rules.

• Wholesale distribution means selling goods to other businesses for resale (with or without processing) to the general public; retail distribution means selling goods directly to the public for their use or consumption.
• A trade is not an ordinary wholesale or retail distribution trade if it substantially involves dealing in investment-type goods (such as collectibles) and a significant proportion of those goods are held for much longer than would normally be expected when trying to sell them at market value.
• Positive indicators of an ordinary distribution trade include buying in bulk and selling in smaller quantities, operating across different markets, and employing staff and incurring genuine trading expenses beyond the cost of goods.
• Negative indicators include trading with connected persons, matching purchases with forward sales, holding goods for unusually long periods, operating from non-typical trade premises, and never taking physical possession of the goods.