In Dipak Patel v HMRC [2015] TC04225 the FTT disallowed sideways loss relief. The taxpayer's spice and cookery, and photography businesses were hobbies: he was not operating them on a commercial basis. 

S66 ITA 2007 restricts sideways loss relief for income tax if a trade operates on a non-commercial basis.

  • Mr Patel, a full-time council worker started a trade in 2004 known as “Silver Spice” supplying ingredients and running cookery workshops.
  • In 2007 he started a separate trade known as “Art Sutra” which sold art and photographic images of Indian culture.
  • He conducted his trading activities as a sole trader alongside his full time employment and he claimed loss relief every year for both trades.
  • HMRC denied loss relief and the taxpayer appealed.

Despite having professional looking packaging, a website, and trade marking Silver Spice, the FTT found on evidence that his activities were hobbies and they would never become profitable unless the taxpayer devoted more time to them.

It said "Mr Patel’s real motivation was not profit, but the enjoyment he got from working with people and conveying his passion for cookery and photography."


Case reference: Dipak Patel v HMRC [2015] UKFTT TC04225 

Losses (sideways): restriction for uncommercial trades