Claim for losses arising from racehorse trade

The taxpayer was a self-employed tax consultant and also bought and sold shares in racehorses. He claimed that for the years 2007-08 to 2012-13 he dealt in thoroughbreds commercially with a view to a profit. He incurred losses of about £160 000 in that period which he sought to claim against his other income.

After an enquiry HMRC refused the claim on the basis the taxpayer’s horse dealing was not a taxable activity and raised discovery assessments.

The First-tier Tribunal said the taxpayer’s description ‘dealer in thoroughbreds’ was not accurate. A dealer bought and sold goods with the aim of making a profit. The taxpayer did not buy and sell horses or make decisions as to which horse should be bought. Rather he bought shares in horses or racing partnerships. The latter in particular could not have been with a view to a profit because the acquisitions documents made...