Sideways relief is not available

The taxpayer was a general partnership established to form a vehicle for a property development in Montenegro. It recorded losses of more than £36m in the 2008-09 partnership tax return based on a write-down of stock in the partnership. HMRC refused the losses on the basis that they were not trading losses. The taxpayer appealed.

The First-tier Tribunal in a decision extending to 157 pages found that the taxpayer had failed to raise the capital needed – indeed it had obtained barely even 40% of the sum required. Yet it had been decided the project should proceed. This distinguished the case from other ‘tax-advantaged arrangements’ in that they had successfully raised the funds for their undertakings. They were able to fulfil their contractual obligations. This was not the case here. Indeed the tribunal said when the taxpayer entered the various contractual arrangement the project was ‘only half...