Tax warning for loss making businesses

 Case Report: Patel [2015] TC 04225

The First-tier Tribunal (FTT) has dismissed a taxpayer’s appeal against HMRC’s decision not to allow him to set off losses from his two trades: one supplying ingredients and running cookery workshops; and the other selling art and photographic images of Indian culture, against his general income. The FTT found that neither trade was carried on on a commercial basis nor with a view to the realisation of profits, but more to pass on the taxpayer’s knowledge of an ancient Hindu philosophy and his enthusiasm for cookery and spices, photography and Indian culture.

COMMENT There have been a lot of cases on this topic recently and loss making businesses would be well advised to look at their busi9ness mdel and future projections to ensure that the business can and will return to profitability say Harris & Co accountants Northampton