The deadline for filing and paying for the 22/23 tax year was on Wednesday last week. But if you’ve been naughty last tax year, should you have disclosed your income and paid tax on it?

HMRC taxes illegal activities if they are a ‘trade’. This generally means ‘on a commercial basis with a view to profits’, but the actual tax definition is found within complex case law dating back 70 years. It is the same test used for other areas of income tax, and has been widely misrepresented in recent media regarding individuals selling on sites like Vinted or eBay.

Smuggling alcohol for sale is a trade (Lindsay, Woodward & Hiscox v CIR). Drug dealing is also a trade (Woodward & Hiscox v CIR). Burglary is not (J P Harrison (Watford) Ltd v Griffiths). And receiving stolen goods might be a trade (Denman J v Mallendine).

Drug dealing is taxable because according to HMRC Manuals “selling controlled drugs and smuggling goods for sale (as opposed to personal consumption) may well involve the commercial acquisition and provision of goods or services.”

HMRC notes that profits from burglary are not taxed because “what is lacking is the commercial character. [Burglars] do not obtain their goods by normal commercial means such as buying or growing them.” However, the US tax authorities operate differently, and will tax individuals on the market value of stolen property, unless it is returned in the same year.

The advice is clear: if you are a thief who wants to remain compliant with the domestic tax code of your jurisdiction, but pay the least amount of tax, be a thief in the UK and not the US*

*Obviously none of the above is actual advice