Shanks v Revenue & Customs (INCOME TAX - loss deduction - profession - partnerships) [2019] UKFTT 279 (TC) (26 April 2019)

Shanks v Revenue & Customs (INCOME TAX - loss deduction - profession - partnerships) [2019] UKFTT 279 (TC) (26 April 2019)

Mr Shanks was a partner/member in a succession of partnerships, not a sole practitioner. Losses from Douglas Shanks LLP could not be carried forward against profits from other firms as they were separate trades. The draft accounts provided did not substantiate the claimed losses. The inaccuracies in Mr Shanks's returns were not deliberate or careless as he made full disclosure and took a considered view, albeit incorrect. Therefore, the closure notices are confirmed but the penalty is removed in full.

Citation
[2019] UKFTT 279
Parties
Appellant: Mr Douglas Shanks; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
26 April 2019
Procedural Posture
Tax Appeal / First Tier Tribunal Decision
Outcome
Appeal allowed in part
Legal Topics
Income Tax, Loss Deduction, Professional Partnerships, Carry Forward of Losses, Inaccuracy Penalty
Tax Law Income Tax Loss Deduction Professional Partnerships Carry Forward of Losses Inaccuracy Penalty

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Parties

Mr Douglas Shanks

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal Decision

Legal Issues

  1. 1 Whether Mr Shanks was entitled to carry forward losses from Douglas Shanks LLP against later profits from other partnerships under s 83 ITA 2007
  2. 2 Whether the inaccuracy penalty under Sch 24 FA 2007 was properly imposed

Ratio Decidendi

Mr Shanks was a partner/member in a succession of partnerships, not a sole practitioner. Losses from Douglas Shanks LLP could not be carried forward against profits from other firms as they were separate trades. The draft accounts provided did not substantiate the claimed losses. The inaccuracies in Mr Shanks's returns were not deliberate or careless as he made full disclosure and took a considered view, albeit incorrect. Therefore, the closure notices are confirmed but the penalty is removed in full.

Court Disposition

Appeal allowed in part

Orders

  • Closure notices for tax years 2008-09, 2009-10, and 2010-11 are confirmed.
  • The penalty is removed in full.