Fluctuating milk price

Restrictions to claiming sideways loss relief

The taxpayers had a dairy farm. In 2007 as a result of the business making losses they sold some of their land and herd and decided to invest the proceeds in a robotic milking shed. They estimated this would bring a 25% increase in production. During 2008 they re-constituted the dairy herd to make up for the losses and in 2009 the robotic milking shed was built. However its construction suffered from delay and financial problems so that milk production did not increase as quickly as hoped.

By 2011 although the outlook was better the farm was still running at a loss so the taxpayers decided to sell the business. They claimed the losses against their other income for 2010/11. The taxpayers said that ITA 2007 s 68(3)(b) was satisfied – they were ‘competent’ farmers...