ACCA Advanced Taxation (ATX) Practice Exam

What constitutes a 'major change' in the nature or conduct of trade?

1. Increasing workforce size

2. Change in products or services offered

3. Acquisition of new technology

4. Expansion into multiple locations

The correct answer is: Change in products or services offered

A 'major change' in the nature or conduct of trade refers to significant alterations that can influence the fundamental operations or strategic direction of a business. The choice of a change in products or services offered is correct because it directly relates to the core activities of the business. Altering what a business sells or provides can redefine its market position, customer base, and competitive strategy. This change reflects shifts in consumer demand or business strategy and can considerably impact revenue streams and overall business viability. For instance, if a company that traditionally supplied hardware begins to offer software solutions, that shift fundamentally changes how it interacts with customers and competes in the marketplace. Such a transition can also warrant adjustments in marketing, sales approaches, and even supply chain management, indicating a substantial transformation. Increasing workforce size, acquiring new technology, and expanding into multiple locations, while significant, do not inherently change the fundamental nature or conduct of the trade as directly as altering the products or services offered. The former changes are more about scaling operations or improving efficiency, rather than transforming the essence of what the business does.