Kitching v Revenue & Customs [2013] UKFTT 384 (TC) (09 July 2013)

Kitching v Revenue & Customs [2013] UKFTT 384 (TC) (09 July 2013)

The appellant was not entitled to loss relief for the years in question because, although the business was carried on on a commercial basis, it was not carried on with a view to the realisation of profits during the relevant periods. The evidence did not support a reasonable or subjective expectation of profit without significant change to the business model. The discovery assessment for 2007-08 was made in time as the assessment was created within the statutory period.

Citation
[2013] UKFTT 384 (TC)
Parties
Appellant: Stephen Kitching; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
09 July 2013
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax Chamber) Decision
Outcome
Appeal dismissed
Legal Topics
Income Tax, Loss Relief, Section 64 Income Tax Act 2007, Section 66 Income Tax Act 2007, Discovery Assessments, Commercial Basis of Trade
Tax Law Income Tax Loss Relief Section 64 Income Tax Act 2007 Section 66 Income Tax Act 2007 Discovery Assessments Commercial Basis of Trade

Case Brief

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Parties

Stephen Kitching

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the appellant is entitled to set off business losses against employment income under section 64 ITA 2007 for tax years 2007-08, 2008-09, and 2009-10
  2. 2 Whether the trade was carried on with a view to the realisation of profits as required by section 66 ITA 2007
  3. 3 Whether the discovery assessment for 2007-08 was made out of time

Ratio Decidendi

The appellant was not entitled to loss relief for the years in question because, although the business was carried on on a commercial basis, it was not carried on with a view to the realisation of profits during the relevant periods. The evidence did not support a reasonable or subjective expectation of profit without significant change to the business model. The discovery assessment for 2007-08 was made in time as the assessment was created within the statutory period.

Court Disposition

Appeal dismissed

Orders

  • Loss relief for tax years 2007-08, 2008-09, and 2009-10 refused
  • Discovery assessment for 2007-08 upheld as made in time