Profits expected?

Claim to set farming losses against other income

HMRC enquired into the taxpayer’s 2011/12 return asking why his farming losses had not been restricted under ITA 2007 s 67 because the business had made losses for the previous five years.

The taxpayer confirmed that losses had been made since 2004/05 but said only those for 2007/08 to 2010/11 had been set against other income. The 2011/12 losses had therefore not been restricted because only those of the previous four years had been claimed. He said the five-year limit should be extended under s 67(3)(b) because he had changed from dairy to beef farming and had a reasonable expectation that better beef prices would make the business profitable.

HMRC said regardless of the change of emphasis from dairy to beef the trade was the same and asked for more information about the future of the business. The taxpayer said...