Henderson v Revenue & Customs (INCOME TAX/CORPORATION TAX : Assessment/self-assessment) [2015] UKFTT 584 (TC) (25 November 2015)

Henderson v Revenue & Customs (INCOME TAX/CORPORATION TAX : Assessment/self-assessment) [2015] UKFTT 584 (TC) (25 November 2015)

The rental income from the excavation licence is property income, not trading income, and cannot be set off against farming losses. The appellant does not meet the reasonable expectation of profit test for sideways relief, and the losses cannot be offset against general income. The appeal is dismissed and HMRC's assessments are confirmed.

Citation
[2015] UKFTT 584 (TC)
Parties
Appellant: John Henderson; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
25 November 2015
Procedural Posture
Income Tax Appeal / First Tier Tribunal Decision
Outcome
Appeal dismissed
Legal Topics
Income Tax, Trade Loss Relief, Property Income, Farming Losses, Sideways Relief
Tax Law Income Tax Trade Loss Relief Property Income Farming Losses Sideways Relief

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Parties

John Henderson

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal Decision

Legal Issues

  1. 1 Whether rental income from an excavation licence is trading income or property income
  2. 2 Whether farming losses can be set off against property income under sideways relief provisions
  3. 3 Whether the reasonable expectation of profit test is met for sideways relief

Ratio Decidendi

The rental income from the excavation licence is property income, not trading income, and cannot be set off against farming losses. The appellant does not meet the reasonable expectation of profit test for sideways relief, and the losses cannot be offset against general income. The appeal is dismissed and HMRC's assessments are confirmed.

Court Disposition

Appeal dismissed

Orders

  • HMRC's assessments for 2009-10, 2010-11, and 2011-12 confirmed
  • No sideways relief allowed for farming losses