In Jerome Anderson v HMRC [2016] UKFTT TC05314, the First Tier Tribunal (FTT) denied a football agent relief for trading losses: if he was carrying on a trade, then it was not on a commercial basis with a view to making profits.

ITA 2007 s66 restricts any relief for trade losses if the trade is not commercial.

  • Mr Anderson (Mr A) worked successfully as a football agent for many years, representing a number of big name players such as Dennis Bergkamp and Thierry Henry. 
  • In January 2009 Mr A paid £3 million to Bafana, a soccer academy in South Africa, through a scheme marketed by a Jersey company.
  • In return for the money paid he was able to choose three players from the academy, securing an interest for himself in any future transfer fees.
  • Bafana went into administration in 2011 and Mr A received no significant income.
  • Mr A claimed trading losses of £3 million in his 2008/09 tax return.

HMRC was suspicious of the tax scheme and made a discovery assessment. It disallowed the losses on the grounds that he was either not carrying on a trade, and if he was then the trade was not commercial.

Mr A argued that his activities under the Bafana scheme constituted a trade, and his specific knowledge, expertise and input meant that he was not merely a passive investor in a scheme.

The FTT agreed that the losses should be disallowed:

  • Lack of commerciality: although Mr A did undertake some activities, such as watching DVDs of the players and meeting with contacts around Europe in order to raise their profile and that of the academy, the amount of time he spent on this was not commensurate with his level of expenditure.
  • Lack of profit motive: had he been serious about making profits he would have visited the academy to make sure that it was operating as it should and to make sure he was picking the best players.  He did not directly provide the academy with any value or expertise which would be expected if he were seriously pursuing profit.
  • Mr A also fell foul of anti-avoidance rules: evidence suggested that the availability of tax losses was more important to him than what was actually going on at the academy.
  • The FTT was not satisfied that there was sufficient activity to constitute a trade.  His activities were more akin to an investor who has knowledge of the market that he was investing in, but who has no substantial active day to day involvement in the activity. 


Case reference: Jerome Anderson v HMRC [2016] UKFTT TC05314

Losses (sideways): restriction for uncommercial trades

Losses, trade losses and sideways relief