Losses arising from chartering trade

The taxpayer was a yacht chartering business. It had two partners: S and N. For the years 2008-09 to 2015-16 the partnership made losses all of which were allocated to S. He applied to offset these losses against general income under the sideways losses rules in ITA 2007 s 64. HMRC refused the claims for the years 2011-12 to 2015-16.

The First-tier Tribunal accepted that S had acquired the yacht for the sole purpose of using it to carry on the trade of chartering. It was not his intention to use it for his own private purposes. Further it was his aim to generate profits from the business. The partnership had produced a business plan and appointed someone to produce brochures and take advantage of promotional articles in magazines. However despite ‘strenuous efforts’ to control costs the tribunal said there were ‘some serious...