In a recent First Tier Tribunal case (Charlotte MacDonald v HMRC), a taxpayer was refused sideways loss relief for losses from running an annual woodland shoot. The tribunal found that although the activity was carried out on a commercial basis, it was not run with a genuine expectation of making profits. 

What is sideways loss relief? 

Sideways loss relief allows a taxpayer to offset trading losses against their other income, either in the year of the loss, the previous year, or both. To qualify, the trade must be carried on: 

• commercially, and 

• with a genuine intention of making profits. 

Why the claim was refused 

HMRC accepted that the woodland shoot was not just a hobby, but argued that it wasn’t run with a real view to profit. The tribunal agreed. 

The shoot had made losses almost every year since it began, with only one year showing a small profit in 15 years. There was no reasonable expectation that it would ever become profitable. Because of this, the conditions for claiming sideways loss relief were not satisfied, and the taxpayer’s appeal was dismissed.