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Restricted losses

05 July 2016 / Mark Wallace
Issue: 4557 / Categories: Comment & Analysis

Farming losses and sideways relief.


  • Farming activities must be carried out demonstrably on a commercial basis.
  • ITA 2007 s 67 applies after five successive tax years of losses.
  • Unexpected events do not alter the effect of the rules.
  • Reasonable expectation of profit test has featured in several First-tier Tribunal cases.

Often when a piece of legislation is introduced its consequences are felt more widely than expected due either to how it is drafted or circumstances changing. This article considers the income tax rules that restrict setting off farming (including market gardening) losses after they have been incurred for more than five continuous tax years.

The rules are in ITA 2007 s 67 and s 68; similar ones apply for corporation tax (CTA 2010 s 48 and s 49)....

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