Sideways relief put under Spotlight

HMRC have published Spotlight 8 which concerns investments to obtain trade loss reliefs also known as sideways loss relief.

Typically a large loss is generated either in partnership or alone by accounting for the arrangement as a trade and either writing down the value of trading stock or claiming deductions or allowances for purported trading expenditure.

Often these schemes are funded in part by borrowing and may include a mechanism that means repayment is guaranteed.

The individuals claim the loss as sideways loss relief against their other tax liabilities. HMRC say these schemes fail to meet the commercial and other requirements for sideways loss relief so that no relief is available to the participants.

The Revenue adds that individuals participating in these schemes do not meet the requirement that at least ten hours a week are spent personally engaged in commercial activities of the...