Tribunal: No loss relief for failed business venture
The Tribunal recently had to determine whether loss relief was available in respect of a failed business venture.
The taxpayer, who was self-employed, claimed loss relief of £100,000 for the tax year ending 5 April 2007, under TA 1988, s 380 in respect of the promotion of three classical music concerts that failed to run.
He argued he had promoted the concert in a ‘personal capacity’ and was thus entitled to the loss relief. HMRC refused the loss claim, saying West Yorkshire Live Events Ltd (WYLEL), a company of which the appellant had also been a director, was the promoter.
The appellant asserted that he personally suffered a £100,000 loss from the failed business venture, which was made up of a loan of £85,000 to fund a performer’s fees and £15,000 in miscellaneous expenses.
Although HMRC accepted there was a loss from the cancelled concerts, they said the evidence pointed to WYLEL being the official promoter. This would mean that it was the company that had made the loss and that such a loss could only be offset against profits made by the company. And the loss, if carried forward, could only be offset against future profits of the same trade.
Due to inconsistent evidence, as well as unreliable evidence from the taxpayer, the Tribunal found the taxpayer was not acting on his own account as a promoter of the concerts. He was therefore not entitled to claim loss relief.