The First-tier Tribunal held (among other things) that two of the three appellant LLPs were trading, but that the third was not; and that losses were not computed correctly as a matter of generally accepted accounting practice.
The three appellant LLPs were involved in the production of a large number of films and video or computer games. The appellants contended that, in their early years, those activities resulted in trading losses, which their investors could in appropriate circumstances set against their other taxable income. Following enquiries, HM Revenue and Customs issued closure notices amending the partnership tax returns to deny the loss relief claims. The appellants appealed.
The First-tier Tribunal (FTT) had to consider a number of issues. On the first issue (i.e. whether the appellants were carrying on a trade), the FTT concluded on the facts and evidence that two of the LLPs (Ingenious Film Partners 2 LLP (IFP2)
