Duncan v Revenue & Customs (INCOME TAX - carried forward property business losses) [2021] UKFTT 81 (TC) (25 March 2021)

Duncan v Revenue & Customs (INCOME TAX - carried forward property business losses) [2021] UKFTT 81 (TC) (25 March 2021)

The statutory framework requires that carried forward property business losses are deducted at Step 2 of the s23 ITA 2007 calculation, before personal allowance at Step 3, as mandated by s118(4) and s25(3). Therefore, Ms Duncan's losses were exhausted in prior years and not available for 2017-2018. HMRC validly opened an enquiry under s9A TMA 1970 because the loss claim was included in the 2017-2018 return and affected the tax chargeable for that year.

Citation
[2021] UKFTT 81
Parties
Appellant: Sarah Duncan; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
25 March 2021
Procedural Posture
Income Tax Appeal (first Tier Tribunal Tax Chamber) / Appeal Against Closure Notice (post Enquiry)
Outcome
Appeal dismissed
Legal Topics
Income Tax, Carried Forward Property Business Losses, Personal Allowance, Tax Return Enquiries, Order of Reliefs and Allowances, Procedural Validity of HMRC Enquiries
Tax Law Income Tax Carried Forward Property Business Losses Personal Allowance Tax Return Enquiries Order of Reliefs and Allowances Procedural Validity of HMRC Enquiries

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 4 Party arguments 2 Amounts and remedies 3
Sign in to unlock

Parties

Sarah Duncan

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Income Tax Appeal (first Tier Tribunal Tax Chamber) / Appeal Against Closure Notice (post Enquiry)

Legal Issues

  1. 1 Whether carried forward property business losses must be applied in priority to personal allowance in subsequent tax years
  2. 2 Whether HMRC validly opened an enquiry under s9A TMA 1970 or should have proceeded under Schedule 1A

Ratio Decidendi

The statutory framework requires that carried forward property business losses are deducted at Step 2 of the s23 ITA 2007 calculation, before personal allowance at Step 3, as mandated by s118(4) and s25(3). Therefore, Ms Duncan's losses were exhausted in prior years and not available for 2017-2018. HMRC validly opened an enquiry under s9A TMA 1970 because the loss claim was included in the 2017-2018 return and affected the tax chargeable for that year.

Court Disposition

Appeal dismissed

Orders

  • The amendments made by the closure notice stand good.