John Cree Locke Agnew v Commissioners for Her Majesty's Revenue and Customs
Decision date: 14 June 2010
Neutral citation: [2010] UKFTT 272 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned loss relief claimed by Mr Agnew for a small nail/beauty business run from the family home. The Tribunal found the business was in fact carried on by Mrs Agnew (not the Appellant) and, in any event, that any trade carried on by the Appellant was not conducted on a commercial basis with a view to profit, so loss relief was not available. A 2003–04 discovery assessment was discharged as out of time, but assessments for 2004–05 and 2005–06 and closure notices for 2006–07 to 2008–09 were upheld.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
Where evidence shows a business was presented to customers and carried on by another person (here Mrs Agnew), the nominal claimant will not be treated as carrying on the trade for loss-relief purposes; additionally, a pattern of sustained, structured losses (including artificial family wage payments lacking commercial rationale) supports a finding that the activity was not carried on commercially or with a reasonable expectation of profit, defeating loss relief.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal indicated that an earlier agreement by HMRC on basis year calculations may be time- or period-limited and does not preclude later examination of commerciality for subsequent years; it also remarked that wages paid between family members require formal, consistent records and commercial justification to be deductible as wholly and exclusively for the trade.