Judith Thorne v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Judge Sinfield,Judge Falk |
| Neutral Citation | [2016] UKUT 0349 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,28 July 2016 |
| Date | 28 July 2016 |
| Published date | 16 February 2017 |
[2016] UKUT 0349 (TCC)
Appeal number: UT/2015/0030
INCOME TAX – appeal against closure notice disallowing certain losses – loss
relief – section 66 Income Tax Act 2007 – whether growing asparagus for sale is
farming or market gardening – if market gardening, whether horse breeding and
asparagus business single composite trade- decision of First-tier Tribunal set aside
and case remitted
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
BETWEEN:
JUDITH THORNE Appellant
- and –
THE COMMISSIONERS FOR
HER MAJESTY’S REVENUE AND CUSTOMS Respondents
Tribunal:
Judge Greg Sinfield
Judge Sarah Falk
Sitting in public in London on 27 June 2016
Michael Firth, counsel, instructed by Kent & Sussex Accountancy Services, for
the Appellant
Kate Balmer, counsel, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2016
2
DECISION
Introduction
1. This appeal concerns a claim by the Appellant (‘Mrs Thorne’) for ‘sideways’ loss
relief under section 64 of the Income Tax Act 2007 (‘ITA’) which she claimed on her
2008-09 self-assessment return in respect of trading described as “Equestrian breeder &
Farming”. The activities included in that description were breeding and rearing of event
horses with a view to selling them (‘the equestrian activity’) and growing and selling
asparagus (‘the asparagus business’). The Respondents (‘HMRC’) refused the claim on
the basis that the equestrian activity and the asparagus business were a single composite
trade and, viewed as such, it was not carried on in 2008-09 on a commercial basis with a
view to the realisation of profits. HMRC issued a closure notice disallowing Mrs
Thorne’s claim for losses arising in the tax year 2008-09. Mrs Thorne appealed to the
First-tier Tribunal (‘the FTT’).
2. In a decision released on 30 July 2014, [2014] UKFTT 0730 (TC), (‘the
Decision’), the FTT (Judge Alison McKenna and Ms Gill Hunter) held that the
equestrian activity and asparagus business were a single, composite trade because Mrs
Thorne had submitted a composite tax return in which she made an amalgamated claim
for tax relief in respect of both activities. Considering the two activities together, the
FTT found that the composite trade was not operated on a commercial basis or with a
view to the realisation of profits. For those reasons, the FTT concluded that the
restriction in section 66 ITA applied and sideways loss relief was not available. Save as
otherwise indicated, paragraph references in square brackets in this decision are to the
paragraphs in the Decision.
3. Mrs Thorne now appeals, with the permission of the Upper Tribunal, against the
Decision on the ground that the FTT erred in concluding that the equestrian activity and
the asparagus business were a single composite trade. Mrs Thorne contends that the
FTT should have found that the equestrian activity and the asparagus business were
separate trades and that she was entitled to deduct the losses relating to the asparagus
business from her general income. For the reasons given below, we allow the appeal,
set aside the Decision and direct that the case be remitted to a differently constituted
First-tier Tribunal.
Factual background
4. There is no challenge to the findings of fact by the FTT in this case. The facts are
set out principally at [7] to [17] of the Decision. There were no witness statements, as
such, before the FTT but Mrs Thorne’s evidence was incorporated in a document
entitled “Summary of the case for the Appellant” which contained an indiscriminate mix
of facts and submissions. It is clear that the FTT’s findings of fact were based on
HMRC’s statement of case, the written summary of Mrs Thorne’s case and her evidence
to the FTT at the hearing. At the hearing before us, Ms Balmer accepted and relied on
some of the facts in Mrs Thorne’s summary which we have included in our description
of the material facts below.
5. Yew Tree Farm consists of a farmhouse, outbuildings and 38 acres of land. Mrs
Thorne has lived there since December 1995. Mrs Thorne has always used much of the
land as pasture for her horses. At some point before April 2004, Mrs Thorne carried out
a substantial amount of work on the outbuildings to turn them into stables, a feed room,
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