The taxpayer’s activities in purchasing a half share of a racehorse and paying towards its training costs with a view to selling the horse later at a profit did not amount to a trade, and was not on a commercial basis for ‘sideways’ loss relief purposes.
The appellant bought a half share in a horse, and shared costs in having it professionally trained for racing. Following some initial promise, the racing performances of the horse declined, and it was eventually sold at a loss.
The appellant claimed losses incurred in his racehorse related activities in the tax year 2010/11 against his other income for that year. Following an enquiry into the appellant's tax return for 2010/11, HM Revenue and Customs (HMRC) disallowed the loss relief claim. This was on the basis that racehorse ownership is a hobby, and that the racing of horses by itself is not a commercially run trade. The appellant appealed.
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