Outstanding losses

Farming losses made in five successive years

The taxpayer reported losses from his farming business in the years 2002/03 to 2012/13. Apart from 2007/08 he set off each year’s loss against other income in the same year. For 2007/08 he entered the loss in the box “total loss to carry forward after all other set-offs”. However he did not complete the box “loss brought forward from earlier years” in later returns. As a result he never claimed relief for the 2007/08 losses.

In April 2014 HMRC opened an enquiry into the taxpayer’s 2012/13 return. They disallowed the loss relief for that year and also for 2010/11 and 2011/12.

Under ITA 2007 s 67 relief is not allowed if a loss was made in a farming business in each of the previous five years. The taxpayer said that instead of claiming the 2007/08 loss...