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The First-tier Tribunal’s view of eligibility of relief on trading losses
KEY POINTS
- The tribunal decided a racehorse business was not commercial and disallowed the loss claim.
- Business plans should set out how a profit can be achieved in future years.
- A client with more than one business must be able to prove they are separate.
- The badges of trade may help differentiate a business from a hobby.
With HMRC’s current enthusiasm to examine equine activities especially losses it is not surprising that several cases concerning the eligibility of tax relief on trading loss claims have made their way to the First-tier Tribunal recently.
A business must be trading on a commercial basis with a view to making a profit (ITA 2007 s 66) if it wishes to claim tax relief on trading losses. The taxpayer has to be able to prove that...
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