Trade in property exists

The taxpayer was a limited liability partnership in the property business. It bought three tenant-free commercial properties in March 2005 at a discount.

The firm planned to obtain tenants and then sell the properties after a few months – but no tenants were found and the taxpayer sold the properties at a loss.

The business claimed the losses as trading losses in its partnership returns for 2005/06 2006/07 and 2007/08. HMRC refused the claims on the basis the taxpayer had intended to keep the properties and receive rental income.

The department amended the returns under TMA 1970 s 30B “amendment of partnership statement where loss of tax discovered”.

The taxpayer appealed on two grounds: HMRC had no statutory right to amend the return under s 30B where no profits had arisen and the losses were derived from a trade.

The First-tier Tribunal agreed that s...