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ELJ McMorris (TC4204)
The taxpayer bought a half-share in a racehorse in February 2010 and agreed to meet half the costs of training livery and racing.
The animal was successful initially and the owners turned down an offer of £50 000 from a potential buyer. The accomplishment was short-lived; the owners sold the horse in summer of 2011 for around £1 000 of which the taxpayer received half.
He claimed loss relief in his 2010/11 tax return in respect of self-employment which he described as “racehorse”. HMRC refused the claim on the ground that owning a horse was a hobby not a trade.
The taxpayer appealed.
The First-tier Tribunal referred to the badges of trade described by Nicolas Browne-Wilkinson in Marson v Morton [1986] STC 463.
The deal in the instant case was a one-off transaction. The taxpayer had not borrowed money for the venture there was...
