S Kitching v HMRC

In S Kitching v HMRC (TC02781 – 18 July) an accountant (K) who was also a keen runner was made redundant in 1989. While seeking new employment he began a small business selling running kit. He opened a shop in 1990. The shop consistently made net losses for which K claimed relief against his employment income. For 2009/10 HMRC rejected his claim on the basis that K had not met the conditions of ITA 2007 s 66(2)(b) since he was not trading ‘with a view to the realisation of profits’. K appealed contending that the business would be profitable if he could achieve a turnover of more than £28 000 which he still hoped to do. The FTT dismissed K’s appeal. Judge Cannan held that s 66 should be construed so that ‘a taxpayer is not permitted relief where it is...