In Bryan Scambler & Rebecca Scambler v HMRC [2017] UKUT 001 the Upper Tribunal (UT) denied sideways loss relief for dairy farmers who had made losses for over five years.

Where a farming or market gardening business makes losses for five years in a row, sideways loss relief is not available in the sixth year unless the ‘reasonable expectation of profits’ test it met.  This requires that a competent person carrying on the activities:

The taxpayers ran a dairy farm, which was loss making for six years due to the low price of milk.

The First Tier Tribunal (FTT) agreed with HMRC that no sideways loss relief claim could be made in the sixth year as the taxpayers would not, at the start of the loss making period, have had a reasonable expectation that no profits would occur for the next five years. 

The UT has now confirmed this:

The taxpayer’s appeal was therefore dismissed.

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Losses (sideways): restriction for uncommercial trades

Case reference: Bryan Scambler & Rebecca Scambler v HMRC [2017] UKUT 001