If a business consists of the sale of commodities on hire-purchase terms, the profits or gains are taxable as trading income.
Under a hire-purchase agreement, the owner of goods agrees to let them on hire to another person, who has the option of becoming the owner when a certain total sum has been paid as rent. Before the total sum has been paid that person can return the goods, subject perhaps to an agreed payment for depreciation.
Profits from hire-purchase activities should be accounted for in accordance with FRS 102, s 20 (as to which see B5.403), or IFRS 16 (previously IAS 17). However, some unincorporated traders may prepare accounts on the basis of a long-standing practice agreed with a trade
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