Trade issue

Loss-producing tax scheme

The taxpayer was a hedge fund manager who took part in the Goldcrest film scheme. This involved the purchase and distribution of film rights designed by the scheme promoters to produce an allowable trading loss for the purpose of TA 1988 s 380(1). HMRC said the taxpayer had not been carrying on a trade but had bought an investment in film distribution rights so no trading loss was available.

The First-tier Tribunal and Upper Tribunal agreed with HMRC. The taxpayer appealed saying the First-tier Tribunal had erred in law.

Referring to the Court of Appeal’s decisions in Eclipse Film Partners No 35 LLP v CRC [2015] STC 1429 and Samarkand Film Partnership No 3 and others v CRC [2017] STC 926 Lord Justice Henderson said neither schemes ‘bore any close similarity’ to Goldcrest but they provided an ‘authoritative and recent restatement of the principles’ that should be...