Continuation of hobby

The taxpayer was a social worker employed full-time by a district council. He began a business in 2004 supplying cooking ingredients and running catering workshops and he set up another business three years later to sell Indian art and photography.

Neither endeavour made a profit. The taxpayer claimed sideways relief in respect of losses against his employment income. HMRC refused on the ground he had not run his businesses on a commercial basis.

The taxpayer appealed.

The First-tier Tribunal found that both concerns began as hobbies and never grew beyond such. Factors indicated a commercial approach including the creation of professionally designed websites but the taxpayer had no clear idea of levels of sales nor was he seriously interested in profit.

His aim was to pursue his interests and share his love of Indian culture. Neither business was continued on a commercial basis.

The only...