In Ardeshir Naghshineh v HMRC [2018] TC06631 the First tier tribunal (FTT) allowed sideways loss relief claims for a farming business where losses were made for 17 years; at the start of the loss making period the reasonable expectation was that the farm would not become profitable until after the period for which relief was being claimed.

Sideways loss relief is not available unless the trade is commercial.

A trade is commercial if:

Where a farming business makes losses for five years in a row, Loss relief  is not available in the sixth and subsequent years unless the ‘reasonable expectation of profits’ test is met. 

 This requires that a competent person carrying on the activities in the tax year in question:

In 1995 Mr Naghshineh purchased a farm as a conventional working agricultural farm. He added to the land over the years and by 2007 owned 438 acres.

The FTT allowed the appeal agreeing with the expert witness that profits could not have been expected until after the end of 2012:

Links to our guides:

Losses (sideways): restriction for uncommercial trades

Losses, trade losses and sideways relief


Farmers: what expenses can I claim?

External link:

Ardeshir Naghshineh v HMRC [2018] TC06631