Conditions not met for loss offset

The taxpayer carried on a sole trade of providing finance for second-hand car sales. He supplied funds to D which acquired second-hand vehicles either for cash or part exchange. D repaid the loan when the car was sold and shared the profit with the taxpayer. He later transferred his trade to a company USL Securities Ltd. D was never a customer of USL.

However D defaulted on its contractual arrangements with the taxpayer.

The taxpayer claimed to offset losses made in a sole trade against his income from USL under ITA 2007 s 86. HMRC refused the claim because the taxpayer’s sole trade was different from that of USL.

The taxpayer appealed.

The First-tier Tribunal found that there had been no transfer of trade to the company. No physical assets were transferred and the consideration for the transfer was described as ‘peppercorn’ in recognition that there was no value...