Sideways relief claims fail

Trades carried on commercially

In the latest round in the litigation between HMRC and Icebreaker partnerships the Upper Tribunal had to decide whether the individual members of the limited liability partnerships (LLPs) could obtain sideways loss relief to set their individual share of their LLP’s trading losses against other income. Seven individuals were chosen as a representative cross-section of the individual members of the Icebreaker LLPs.

Mr Justice Nugee in the Upper Tribunal said the First-tier Tribunal had not erred in law by concluding that ‘a trade which is virtually certain to lead to a loss cannot realistically be described as commercial’. He agreed that ‘a person with a serious profit motive would not embark on a trade which was dependent on the realisation of an unrealistically high profit and hence where loss was much more ... probable than not’.

The appeals failed on this matter.

However the...