Know More About ZAKAT

http://www.slideshare.net/mandalina/types-of-zakat-and-calculation

Badges of Trade from hmrc.gov.uk

BIM20205 - Trade: badges of trade: summary

A summary of each 'badge of trade' is shown below with a brief pointer to its meaning.

Profit-seeking motive	see BIM20210	An intention to make a profit supports trading, but by itself is not conclusive.
The number of transactions	see BIM20230	Systematic and repeated transactions will support 'trade'.
The nature of the asset	see BIM20245	Is the asset of such a type or amount that it can only be turned to advantage by a sale? Or did it yield an income or give 'pride of possession', for example, a picture for personal enjoyment?
Existence of similar trading transactions or interests	see BIM20270	Transactions that are similar to those of an existing trade may themselves be trading.
Changes to the asset	see BIM20275	Was the asset repaired, modified or improved to make it more easily saleable or saleable at a greater profit?
The way the sale was carried out	see BIM20280	Was the asset sold in a way that was typical of trading organisations? Alternatively, did it have to be sold to raise cash for an emergency?
The source of finance	see BIM20300	Was money borrowed to buy the asset? Could the funds only be repaid by selling the asset?
Interval of time between purchase and sale	see BIM20310	Assets that are the subject of trade will normally, but not always, be sold quickly. Therefore, an intention to resell an asset shortly after purchase will support trading. However, an asset, which is to be held indefinitely, is much less likely to be a subject of trade.
Method of acquisition	see BIM20315	An asset that is acquired by inheritance, or as a gift, is less likely to be the subject of trade.

These 'badges' will not be present in every case and of those that are, some may point one way and some the other. The presence or absence of a particular badge is unlikely, by itself, to provide a conclusive answer to the question of whether or not there is a trade. The weight to be attached to each badge will depend on the precise circumstances.
The approach by the courts has been to decide questions of trade on the basis of the overall impression gained from a review of all the badges.

Badges of trade

The recent first tier tribunal decision Dr K M A Manzur v Commissioners for HMRC TC/2010/174 [2010] UKFTT 580 (TC) highlights the importance in applying the simple concept.  It looked at whether a trade is being carried out.
The basis of the concept
How do you establish whether a person is carrying on a trade? 
In 1955 a report by the Royal Commission on the Taxation of Profits and Income reviewed case law and indentified six badges of trade. This was the starting point and as you can imagine there has been some development in the area supplemented by case law. HM Revenue & Customs (HMRC) now lists nine badges of trade:

• profit seeking motive
• the number of transactions
• the nature of the asset
• existence of similar trading transactions or interests
• changes to the asset
• the way the sale was carried out
• the source of finance
• interval of time between purchase and sale
• method of acquisition.

Profit seeking motiveIt is clear that having an intention to make a profit can indicate a trading activity, however by itself it is not enough. In case Salt v Chamber – Ch D 1979, 53 TC 143; [1979] STC 750, a research consultant made a loss on the Stock Exchange after trying to forecast the market. The loss was made after several years and over 200 transactions. This was not seen as trade and capital in nature. It was concluded that share trading by a private individual can never have the badges of trade pinned to them. These transactions are subject to capital gains tax.
In another case, Rutledge v CIR – CS 1929, 14 TC 490, the taxpayer was on a business trip to Germany a taxpayer purchased one million toilet rolls. On returning to the UK the sole consignment of toilet rolls were sold to one individual for a profit. The profit made on this large quantity single purchase and resale item was ‘an adventure in the nature of trade’. The case was decided on the fact that the purchase was not made for own use or investment purposes.
The number of transactionsA single transaction can amount to a trading activity, it is more indicative if there are repeated and systematic transactions. This was clearly displayed in the case Pickford v Quirke – CA 1927, 13 TC 251. A syndicate purchased a cotton-spinning mill with the intension of using it in a trade, however, on purchase of the mill it was in a worse state than first anticipated. The syndicate then decided to strip the mill of its assets and sell it piecemeal, making a profit. This was repeated a number of times with a number of mills. Due to the repeated nature of the transactions it was held that the profits were trading profits and taxable as such.
The nature of the assetThis principle is more difficult to explain, it looks at the asset, problems arise when assets are bought either as:

• an investments that has the ability to generate income
• personal assets
• some assets used by a trade such as plant and machinery.

An important case in this area was Marson v Morton – Ch D 1986, 59 TC 381; [1986] STC 463; [1986] 1 WLR 1343. This was where land was purchased with the intension to hold it as an investment. No income was generated by the land, however, it did have planning permission. The land was sold latter following an unsolicited offer. As the transaction was far removed from the taxpayer’s normal activity (potato merchant) and was similar to an investment, it was not a trading profit. The transaction was not an adventure in the nature of a trade.
Another case Wisdom v Chamberlain – CA 1968, 45 TC 92; [1969] 1 WLR 275; [1969] 1 All ER 332, looked at the principle ‘pride of possession’ assets that generate no income. A taxpayer purchased two large quantities of silver bullion to counter the effects of the devaluation of the pound. The purchase was made following advice and was partly financed by loan. As the purchase was done on a short term basis in order to realise profit. There was an adventure in the nature of trade and was therefore assessed as trading profit.
Existence of similar trading transactions or interestsThis is best demonstrated in the case CIR v Fraser [1942] 24TC498. In this case the taxpayer was a woodcutter who bought a consignment of whisky in bond. He subsequently sold the whisky through an agent at a profit. Within the decision the judge stated:
‘The purchaser of a large quantity of a quantity of a commodity like whisky, greatly in excess of what could be used by himself, his family and friends, a commodity which yields no pride of possession, which cannot be turned to account except by a process of realisation, I can scarcely consider to be other than an adventurer in a transaction in the nature of a trade… Most important of all, the actual dealings of the respondent with the whisky were exactly of the kind that take place in ordinary trade.’
Changes to the assetIt is important to take note of any changes or modifications made to an asset that may make it more marketable. In the case Cape Brandy Syndicate v CIR – CA 1921, 12 TC 358; [1921] 2 KB 403, members of a wine syndicate joined in a separate syndicate to purchase brandy from South Africa. Some was shipped to the East with the remainder being sent to London to be blended with French brandy, re-casked and sold at a profit. The taxpayer tried to argue that the transaction was of a capital nature from the sale of an investment. It was held that a trade or business was carried on and was assessable as a trading profit.
The way the sale was carried outHMRC states in its guidance that it is always a pointer if a transaction follows that of a ‘undisputed trade’. The case CIR v Livingston and Others 11TC538, involved three unconnected individuals that together bought a cargo vessel. The vessel was converted into a steam-drifter and sold for a profit. The purchase was the first vessel the three individuals bought. An assessment was raised on the profit which was upheld as a trading profit. Within the decision the judge stated:
‘I think the test, which must be used to determine whether a venture such as we are now considering is, or is not, in the nature of “trade”, is whether the operations involved in it are of the same kind, and carried on in the same way, as those which are characteristic of ordinary trading in the line of business in which the venture was made.’
The source of financeDetermining the source of finance is important when deciding whether a trade is carried on. Finance taken out to purchase an asset, in the first instance may indicate that to repay the debt the asset would have to be sold.
This was demonstrated in the Wisdom v Chamberlain – CA 1968, 45 TC 92; [1969] 1 WLR 275; [1969] 1 All ER 332 mentioned above.
Interval of time between purchase and saleThe length of time an asset is held is an important indicator of trade. The longer the period of ownership the greater the chance of it been seen as an investment rather than a trade. HMRC also look at the intention, if you can demonstrate an intention it could indicate the tax treatment. The two key cases on this are Wisdom v Chamberlain – CA 1968, 45 TC 92; [1969] 1 WLR 275; [1969] 1 All ER 332 and Marson v Morton – Ch D 1986, 59 TC 381; [1986] STC 463; [1986] 1 WLR 1343 both mentioned above.
Method of acquisitionFinally, it is important to look at how an asset is acquired. If it is inherited or gifted it is a good indication that a trade is not being carried, although this is not always the case. An asset acquire at a market could indicate that it has either been purchased for a trade or an investment.
The case Taylor v Good – CA 1974, 49 TC 277; [1974] STC 148; [1974] 1 WLR 556; [1974] 1 All ER 1137 concerned a taxpayer who purchased a house with the intention of using it as a family home. The taxpayer’s partner did not approve the house and refused to move in, which forced the taxpayer to sell the house immediately. The purchaser genuinely had the intention of not buying the property for a profit motive. As the sale was a short period of time after purchase it was still not deemed to be a trade. Within the decision the judge stated:
‘Even if the house was purchased with no thought of trading, I do not see why an intention to trade could not be formed later. What is bought or otherwise acquired (for example, under a will) with no thought of trading cannot thereby acquire an immunity so that, however filled with the desire and intention of trading the owner may later become, it can never be said that any transaction by him with the property constitutes trading. For the taxpayer a non-trading inception may be a valuable asset: but it is no palladium. The proposition that an initial intention not to trade may be displaced by a subsequent intention, in the course of the ownership of the property in question, is, I think, sufficiently established…’
This is only a summary of the badges of trade and leading tax cases. As in all cases, each situation must be judged on its own merit.
Links to the cases included the first tier tribunal decision on Dr K M A Manzur v Commissioners for HMRC can be found here.

source : http://uk.accaglobal.com/uk/members/technical/advice_support/tax/income_tax/2011/badgesoftrade

Thank you for ACCA GLOBAL.

Punishment for False Evidence

Recently read the Bantuan Rakyat 1Malaysia Scheme (BR1M) which give those poor RM500 aid.

From what our minister warning, I learn 1 law that is Section 193 of Penal Code Punishment for false evidence.

193. Whoever intentionally gives false evidence in any stage of a judicial proceeding, or fabricates false evidence for the purpose of being used in any stage of a judicial proceeding, shall be punished with imprisonment for a term which may extend to seven years,
and shall also be liable to fine; and whoever intentionally gives or fabricates false evidence in any other case, shall be punished with imprisonment for a term which may extend to three years, and shall also be liable to fine.

So do not simple sign declaration, it will get you into trouble.

Mareva injunction

Few days ago, read a judgement of " The Board of Trustees of the Sabah Foundation, SINSURAN SDN BHD and SERANUM SDN BHD v DATUK SYED KECHIK BIN SYED MOHAMED and Zara Sdn Bhd".

From the judgement by Kota Kinabalu High Court Judge DATO’ ABDUL RAHMAN SEBLI, I notice that plantiffs applied for and obtained a " Mareva injunction".

What is actually this Mareva injunction, it is something like a freezing order.

Although plantiff at last lost the case in apex court and cost it more later, but at least a good try. Hehe...

That day learn something like mareva injuction. Hope write in this blog to refer in the future.

PPSMI (Teaching of Science and Mathematics in English policy) or (PENGAJARAN DAN PEMBELAJARAN SAINS DAN MATEMATIK DALAM BAHASA INGGERIS)

Our Deputy Prime Minister on 4th Nov 2011, so suprise that make a decision that to continue PPSMI until 2016.

[Previously what our DPM said "KUALA LUMPUR: Deputy Prime Minister and Education Minister Muhyiddin Yassin said today that the government’s decision to abolish the teaching and learning of Science and Mathematics in English (PPSMI) is final.

“The matter is closed. I can say that as of this year, PPSMI is not here anymore; we have started a new policy. Maybe people have misunderstood, we’re now actually looking at the beginning of the soft-landing of the MBMMBI (Upholding the Malay Language, Strengthening the English Language) policy,” he said.]

[Asked if it was still too late to reconsider, Muhyiddin said: “It has already been decided in 2009. Maybe like (former prime minister) Dr Mahathir Mohamad said, ‘Malaysians mudah lupa (easily forget)’. It was tabled and passed two years ago to abolish PPSMI. I don’t know why it is being brought up now again.]

But yesterday mentioned that abolish PPSMI will postpone to 2016. Maybe Malaysian really "mudah lupa". And said that the decision is the best interest for 5million students. How about previous decision? Is that not the best interest for the students?

I support the views of our former Prime Minister Tun Mahathir as below:

[Kita harus ingat bahawa pelajaran bukan semata-mata untuk memaju atau mengembangkan bahasa. Pelajaran adalah untuk penguasaan ilmu, pelbagai jenis ilmu.

Yang boleh meningkatkan taraf dan kemajuan bahasa ialah matapelajaran bahasa itu sendiri dan diperingkat yang lebih tinggi mata pelajaran sastera.

Sains dan matematik tidak mungkin menolong kemajuan bahasa, khususnya bahasa Melayu.]

In order to be fair and reasonable, why don't the government conduct a Referendum. Pre before the referendum, give both support and unsupport parties a opportunity to debate.

References:

1) http://www.freemalaysiatoday.com

2) http://chedet.cc

Law - Litigation Defence "Honest and Reasonable Mistake"

23/10/2011 Evening 7:46pm (Warm Weather)

This afternoon from a Hong Kong drama learn the "Honest and Reasonable Mistake" words, one of the way how to defence yourself when get sue.

After google it, finally get the some ideas from Armstrong Legal, appreciate their good work.

According to the Armstrong legal article, below is the example of the case of Honest & Reasonable Mistake:

Thomas (1937) 59 CLR 279

The High Court held that it was a defence to a charge of bigamy that the accused had believed "bona fide and on reasonable grounds” that he was not married and therefore a single man entitled to marry. The basis of the belief of the accused was that his marriage to his "former wife" was not valid because her decree of divorce had not been made absolute, so that she was still a married woman when he married her.

In upholding the defence of honest and reasonable mistake, Latham CJ said: “The belief was that a decree absolute had not been made by the Supreme Court of Victoria. Whether or not such a decree had been made was a question of fact. If no decree absolute had been made, the marriage of the accused's former wife would not have been dissolved and therefore, she would still have been a married woman when she married the accused. Thus, her marriage to the accused would have been invalid, and he would not have been a married person when he went through the ceremony of marriage with Miss Deed. Thus, if his belief as to the matter of fact mentioned had been true, he would not have been guilty of the offence charged.”

Another case that is worth to read regarding to Honest & Reasonable Mistake is, R. v. Park [1995] 2 S.C.R. 836, is a Supreme Court of Canada.

The accused have to have air of reality to substantiated his allegation that he might have had an honest belief that she was giving consent.

The definition of air of reality test, a pre-requisite test conducted to weigh the defense against a criminal charge. The defense should have sufficient evidential value. The evidential foundation is referred to as the air of reality.

Two instances, air of reality test can be applied are:
1. A prima facie case has been made against the accused.
2. An affirmative defense like insanity defense is raised by the accused.


Reference & Notes:
1) http://www.armstronglegal.com.au/web/page/defence_of_honest_and_reasonable_mistake_of_fact


2) http://en.wikipedia.org/wiki/R._v._Park

3) http://definitions.uslegal.com/a/air-of-reality-test/