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 appellant's rental income from the excavation licence is property income, not trading income or wayleave income, and cannot be aggregated with farming trade income. The appellant made consecutive losses in the previous five years and did not meet the reasonable expectation of profit test; thus, sideways relief is not available. HMRC's assessments are confirmed.

Citation
[2015] UKFTT 584
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/corporation Tax Assessment/self Assessment Appeal / First Tier Tribunal (tax Chamber) Decision
Outcome
Appeal dismissed
Legal Topics
Income Tax, Trade Loss Relief, Farming Losses, Property Income, Sideways Relief, Reasonable Expectation of Profit, Wayleave Income, Self Assessment, Discovery Assessment
Tax Law Income Tax Trade Loss Relief Farming Losses Property Income Sideways Relief Reasonable Expectation of Profit Wayleave Income +2 more

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Parties

John Henderson

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Income Tax/corporation Tax Assessment/self Assessment Appeal / First Tier Tribunal (tax Chamber) 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 appellant meets the 'reasonable expectation of profit' test for farming losses under ITA 2007

Ratio Decidendi

The appellant's rental income from the excavation licence is property income, not trading income or wayleave income, and cannot be aggregated with farming trade income. The appellant made consecutive losses in the previous five years and did not meet the reasonable expectation of profit test; thus, sideways relief is not available. HMRC's assessments are confirmed.

Court Disposition

Appeal dismissed

Orders

  • HMRC's assessments for the years 2009-10, 2010-11, and 2011-12 are confirmed.