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HMRC v A Naghshineh

In HMRC v A Naghshineh [2020] UKUT 30 (TCC) (31 January) the Upper Tribunal allowed HMRC’s appeal denying sideways loss relief for farming losses because the ‘reasonable expectation of profit test’ was not met.

Mr Naghshineh purchased a farm in January 1995. Over the following years he acquired additional land and converted the entire farm to organic production. The farm made losses for each year up to 2011/12 but was profitable from 2012/13 onwards.

The taxpayer claimed sideways loss relief against general income under ITA 2007 s 64. HMRC refused the claims in respect of 2007/08 to 2011/12 on the basis of ITA 2007 s 67 which prohibits sideways relief for farming losses for a tax year if a loss was made in each of the previous five tax years subject to certain exceptions.

The issue was whether one of the exceptions applied because the taxpayer met the...

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