No expectation of gain

The taxpayer football club submitted returns claiming losses, which it wished to use by way of group relief to its holding company.

HMRC refused on the ground the taxpayer business was not carried on commercially (CTA 2010, s 44) – and the First-tier Tribunal agreed with the tax department.

The tribunal looking through the club’s accounts and noted operating losses were made and staff costs exceeded turnover and operating income in the relevant accounting years, increasing dependence on the holding company.

The director’s report showed accounts were prepared on a going concern basis, but only by reference to the directors’ and shareholders’ intention to continue to support the club.

The tribunal concluded that the trade was not being carried on with the expectation of gain and the holding company was not entitled to claim relief in respect of losses made by the club.

The taxpayer’s appeal was dismissed.

Issue: 4430 / Categories: Tax cases , Companies