MacDonald v Revenue and Customs (INCOME TAX - loss relief - loss in trade - whether a trade was carried on by the Appellant) [2025] UKFTT 495 (TC) (01 May 2025)

MacDonald v Revenue and Customs (INCOME TAX - loss relief - loss in trade - whether a trade was carried on by the Appellant) [2025] UKFTT 495 (TC) (01 May 2025)

The Tribunal found that although the Appellant carried on a trade (the Shoot), it was not carried on throughout the relevant tax years on a commercial basis or with a realistic view to the realisation of profits as required by s 66 ITA 2007. The Shoot consistently made losses, lacked sufficient commercial organisation, and was not sufficiently integrated with the Estate to constitute a larger undertaking. Therefore, the Appellant was not entitled to set off the Shoot's losses against general income under s 64 ITA 2007.

Citation
[2025] UKFTT 495 (TC)
Parties
Appellant: Charlotte Macdonald; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
01 May 2025
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax) Final Judgment
Outcome
Appeal dismissed
Legal Topics
Income Tax, Loss Relief, Commerciality Test, Section 64 ITA 2007, Section 66 ITA 2007, Discovery Assessment, Closure Notice
Tax Law Income Tax Loss Relief Commerciality Test Section 64 ITA 2007 Section 66 ITA 2007 Discovery Assessment Closure Notice

Case Brief

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Parties

Charlotte Macdonald

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal (tax) Final Judgment

Legal Issues

  1. 1 Whether the Appellant carried on a trade for the purposes of loss relief under s 64 ITA 2007
  2. 2 Whether the trade was carried on on a commercial basis and with a view to the realisation of profits under s 66 ITA 2007
  3. 3 Whether the Shoot was part of a larger undertaking for the purposes of s 66(4) ITA 2007

Ratio Decidendi

The Tribunal found that although the Appellant carried on a trade (the Shoot), it was not carried on throughout the relevant tax years on a commercial basis or with a realistic view to the realisation of profits as required by s 66 ITA 2007. The Shoot consistently made losses, lacked sufficient commercial organisation, and was not sufficiently integrated with the Estate to constitute a larger undertaking. Therefore, the Appellant was not entitled to set off the Shoot's losses against general income under s 64 ITA 2007.

Court Disposition

Appeal dismissed

Orders

  • The Appellant is not entitled to claim loss relief against general income for the relevant tax years under s 64 ITA 2007.
  • The discovery assessment and closure notices issued by HMRC are upheld.