I used to be a 'trade plater', delivering vehicles to auction, so I had a set of 'trade plates'.
Basically, they provide a transferable tax disk, on an imaginary vehicle. So a set of trade plates might have the registration mark 123 OPV. The front plate carries a tax disk (or, more accurately, a tax triangle - since that's the shape of the actual certificate showing that road fund tax has been paid). Let's suppose that a trader wants to move an untaxed vehicle, with the registration number AB12 CDE. If he puts his trade plates onto that car then, as far as the law is concerned, the car is no longer 'AB12 CDE' (which is untaxed) but '123 OPV' (which is taxed), so he can use it on a public road.
There are strict rules for the use of trade plates, which are summarised in Section 2 of this document:
http://www.dft.gov.uk...guidance%20notes.ashx
Chris