The taxpayer operated as a racehorse bloodstock breeder and trainer. Trading loss relief was claimed for 2010/11 against his other income (under ITA 2007, s 64). Trading losses had previously been claimed in his tax returns for 2007/08, 2008/09 and 2009/10.
HMRC opened an enquiry into the taxpayer’s 2010/11 tax return and disallowed the trading losses claimed on the grounds that he was not trading on a commercial basis with a view to the realisation of profits. The taxpayer appealed.
HMRC argued (among other things) that horse racing was not a taxable activity, based on the case Lord Glanely v Wightman [1932] 17 TC 634, where a distinction was made between horse breeding and racing activities. The First-tier Tribunal (FTT) held that the taxpayer’s training activities were not taxable activities in case law terms.
The FTT then considered whether the taxpayer's activities in relation
