Anderson v Revenue and Customs (INCOME TAX/CORPORATION TAX : Losses) [2016] UKFTT 565 (TC) (10 August 2016)

Anderson v Revenue and Customs (INCOME TAX/CORPORATION TAX : Losses) [2016] UKFTT 565 (TC) (10 August 2016)

HMRC had a reasonable basis for issuing the discovery assessment under s 29(1) TMA 1970 as they possessed sufficient information to form a logical and reasonable belief that Mr Anderson's claimed losses were not due. The losses did not arise from a commercial trade but from an investment activity, and the requirements for trading loss relief under ss 64, 66, 72, and 74 Income Tax Act 2007 were not met. The appeal is dismissed.

Citation
[2016] UKFTT 565 (TC)
Parties
Appellant: Mr Jerome Anderson; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
10 August 2016
Procedural Posture
Income Tax/corporation Tax Appeal / First Tier Tribunal (tax) Decision
Outcome
Appeal dismissed
Legal Topics
Income Tax, Trading Losses, Discovery Assessments, Tax Avoidance, Commercial Basis of Trade
Tax Law Income Tax Trading Losses Discovery Assessments Tax Avoidance Commercial Basis of Trade

Case Brief

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Parties

Mr Jerome Anderson

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Income Tax/corporation Tax Appeal / First Tier Tribunal (tax) Decision

Legal Issues

  1. 1 Whether the discovery assessment issued to Mr Anderson on 2 May 2012 was valid under s 29 TMA 1970
  2. 2 Whether the losses claimed by Mr Anderson are allowable as trading losses under s 64 or s 72 Income Tax Act 2007

Ratio Decidendi

HMRC had a reasonable basis for issuing the discovery assessment under s 29(1) TMA 1970 as they possessed sufficient information to form a logical and reasonable belief that Mr Anderson's claimed losses were not due. The losses did not arise from a commercial trade but from an investment activity, and the requirements for trading loss relief under ss 64, 66, 72, and 74 Income Tax Act 2007 were not met. The appeal is dismissed.

Court Disposition

Appeal dismissed

Orders

  • The discovery assessment issued to Mr Anderson on 2 May 2012 is upheld.
  • The losses claimed by Mr Anderson for the 2008-9 tax year are not allowable as trading losses.