Assignment Brief

You are a Trainee Tax Manager with a firm of Chartered Accountants.
Your manager has given you the following tasks regarding Mr Desai to complete for the firm’s clients.
Write a report to Mr Desai addressing all the issues below.

A brief introduction no more than 200 words

Mr Desai has a vocation of collecting antiques and restoring, before selling on after a short while for a small profit. He does this on a regularly basis and sometimes buys in large quantities. Mr Desai’s neighbours Mr Freddy, a retired accountant has informed him that his vocation could be termed as trading by HMRC and advised him to seek financial advice from an accounting firm. Mr Desai does not think that he is trading; it is simply his hobby and a way of making a little profit. Mr Freddy has also informed him that if he does not declare his earnings it may be perceived as tax evasion.

Question 1
Advice Mr Desai’s whether his vocation can be termed as trading, using the six badges of trade and any case law to support answer.

Question 2
a) Explain the difference between Tax evasion and Tax avoidance to Mr Desai and their legal consequence’s- use Journal or recent article to support your work.

b) Discuss any measure HMRC can take if any, to counteract any abusive arrangement.