Losses denied

Was the taxpayer carrying on a single trade?

The taxpayer provided consultancy services to sectors including transport oil gas construction and education. He also leased an item of machinery for use in the oil extraction industry and claimed capital allowances on it. He claimed to carry forward losses under ITA 2007 s 83 against his profits because the allowances exceeded the income.

HMRC refused the loss claim on the ground the taxpayer was carrying on two trades and under s 83(3) the losses could be carried forward against profits of the same trade only.

The First-tier Tribunal said the provision of machinery under a lease was ‘conceptually’ different from that provision of consultancy services. A high degree of linkage would be required for them to be regarded as a single trade. In this case the taxpayer could not provide that. As a...