Role for Cotter

The taxpayer was a VAT-registered self-employed hirer and supplier of plant and machinery. He also received a salary in respect of his directorship of a company.

He submitted his 2007/08 and 2008/09 tax returns in which he disclosed substantial taxable income from employment self-employment and investments and also chargeable gains. The tax and National Insurance due for the two years was £1 049 061 and £998 892 respectively.

The taxpayer took part in transactions in 2008/09 resulting in a loss of £1.5m. He applied to carry back the loss and have it offset against the tax due for 2007/08 under ITA 2007 s 132. He indicated in that return he planned to claim relief of £600 000 in that way because the losses had taken place before he submitted the 2007/08 return.

HMRC said the losses were made as a result of the use...