In Jonathan Beacon v HMRC [2018] TC6362 a NHS consultant’s claim for side-ways loss relief on the costs of running his Tuscan Villa as a business were allowed by the FTT. Whilst HMRC tried to argue that there was no business, it was shown that the letting business did operate commerically, it had just been badly affected by the 2008 financial crisis

S66 ITA 2007 restricts Sideways Loss Relief for income tax if a trade operates on a non-commercial basis.

  • Mr Beacon purchased a villa in Tuscany. He spent many years and huge sums of money in restoring it and then he ran it as a ‘hospitality at home’ trade.
  • He claimed sideways loss relief for losses in 2010-11 and 2011-12 of £218,967 and £139,936
  • HMRC opened enquiries into his tax returns and blocked his loss relief after concluding that his trade was not commercial: it argued that the consultant had operated the business as an exit strategy from his medical practice.
  • The taxpayer appealed.

The First Tier Tribunal (FTT) found that Mr Beacon’s son had renovated the villa. It contained 12 themed rooms let to guests. Guests paid £2,200-£2,700 per week and came on bespoke packages visiting the local area and on courses etc.

Turnover increased steadily from the start of the trade in 2010, amounting to £10,654 in the year to 31 March 2011, £12,011 in the year to 31 March 2012 to £44,000 in the year to 31 March 2017.

Mr Beacon emphasised that the villa was not his home, the only “private” part of the Villa once let was a staff annex containing a bedroom and kitchen.

Evidence showed that the business was well thought out even if the bookkeeping was patchy.

The FTT decided that the business was running commercially, it had suffered due to the 2008 crash and it allowed the loss claim.


HMRC will in any case like this be able to challenge loss claims in later years if there is still no evidence of a profit.  


Losses (sideways): restriction for uncommercial trades


Jonathan Beacon v HMRC [2018] TC6362