Speculative trade

Are losses from buying and selling shares allowable against other income?

The taxpayer used the profits of his pharmacy business to buy and sell publicly listed shares. He said the losses from his share dealings were losses of a commercial trade and claimed to set them off against the profits of the pharmacy business (ITA 2007 s 64 and s 66).

The First-tier Tribunal said it had to decide if the taxpayer’s share activities constituted a trade. The judge said it sat in the ‘“no man’s land of fact and degree” (to use the phrase coined by Lord Simon of Glaisdale in Ransom v Higgs 50 TC 1)’. It would be necessary to evaluate whether the activities were a trade.

The tribunal said the activities bore classic hallmarks of trading. The taxpayer had bought his stock over an extended period with the intention of selling it at a profit. Four...