§ Mr. Maplesasked the Chancellor of the Exchequer if he is satisfied with the way in which the Inland Revenue is administering the taxation provisions in relation to futures; and if he will make a statement.
§ Mr. MooreYes. Section 72 of this year's Finance Act provides—as proposed in my right hon. Friend's Budget speech—that profits on transactions in commodity and financial futures previously assessed under case VI of schedule D should be assessed to capital gains tax. However, it made no change where the taxpayer enters into such transactions in the course of a trade, in which case any profits remain liable to income tax or corporation tax under case I.
Whether in any particular instance the activities of a taxpayer amount to trading will turn on the facts of the matter as well as on the law. But in general a taxpayer, whether an individual or company, would not be regarded as trading in respect of transactions which were relatively infrequent or, for example, where the intention was to hedge specific investments; and an individual is unlikely to be regarded as trading as a result of purely speculative transactions in futures.