Loss Relief Disallowed

In the recent case of Admirals Locums & Bhadra (TC 1416) the First Tier Tribunal disallowed the taxpayers claim for trade loss relief on the grounds that the taxpayer’s trade had ceased.
The taxpayer had previously carried on an employment agency for locums and doctors.  In 1998 he was suspended by the General Medical Council (GMC) and since that date the business had no turnover.
The taxpayer incurred legal fees challenging the GMC’s decision and consequently claimed trading losses.  The taxpayer argued that he had continued to trade despite receiving no income.  Furthermore, he argued that HM Revenue and Customs had allowed the claims in previous years thus creating a legitimate expectation that the claim would continue to be allowed.
The First Tier Tribunal concluded that the expenses were incurred to re-establish a previous trade rather than maintain an existing one  and that no legitimate expectation existed.
The Tribunal did allow the taxpayers appeal in respect of some of the earlier years under question, on the basis that the taxpayer had made a full disclosure therefore a discovery assessment outside of the normal  enquiry window was not allowed.