Look at the whole

Was partnership trading?

The partners of two partnerships claimed losses from the sale and leaseback of films under ITTOIA 2005 s 130 to s 144. HMRC refused their claims on the ground the partnerships were not trading.

The First-tier Tribunal and Upper Tribunal found for HMRC. The latter also dismissed the taxpayers’ application for judicial review on the basis that HMRC’s decision went against practice and the guidance in the Business Income Manual. The taxpayers appealed.

Lord Justice Henderson in the Court of Appeal said the question whether the taxpayers were trading had to be answered ‘by standing back and looking at the whole picture’. Although it was a matter of law whether an activity was capable of constituting a trade this would depend on the facts. It followed that it could ‘never be appropriate to extract certain elements from the overall picture and treat them viewed in...