Mark McLaughlin warns that HMRC might resist claims of an activity amounting to trading, particularly if losses have been incurred.
It is relatively common for an individual to have a ‘sideline’ activity to their main occupation. The question arises whether that activity amounts to a trade. HM Revenue and Customs (HMRC) often argue that the individual’s activity is a taxable trade.
Wearing the badge(s)
However, sometimes individuals (as opposed to HMRC) contend that their activity is a taxable trade (rather than an investment activity or hobby). For example, the activity may be loss-making, and the individual might claim that the activity amounts to a trade, with a view to obtaining ‘sideways’ loss relief against their other income.
Unsurprisingly, HMRC examines many such sideways loss relief claims, with a view to challenging
