Mr G B Forbes v Commissioners for Her Majesty's Revenue and Customs
Decision date: 29 June 2011
Neutral citation: [2011] UKFTT 425 (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
Mr Forbes appealed HMRC amendments and discovery assessments arising from capital allowances claimed on a boat‑charter business. The Tribunal found he carried on a single boat‑charter trade comprising both bare‑boat (unskippered) hire and skippered (service) charters, upheld HMRC’s discovery assessments for 2003–2005, and held that capital‑allowance‑derived losses must be restricted to the extent they relate to provision of plant or machinery for leasing (the bare‑boat element). The appeal was partly allowed: losses are allowable only insofar as attributable to skippered charters, with the parties to agree a fair apportionment (the Tribunal gave example percentages).
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: medium
Where a single trade includes both bare‑boat hirings that give exclusive control to the hirer and hirings with an operator, expenditure and resulting capital‑allowance losses attributable to the bare‑boat (leasing) element fall within the statutory restriction on set‑off of capital allowance‑derived losses; an agent arrangement where the agent markets and operates under the owner’s control and takes commission is consistent with agency/management of the trade rather than a lease by the agent.
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 noted (consistent with guidance discussed) that providing an operator with the plant and machinery typically indicates provision of a service rather than mere hire; and that commercial features—marketing, licensing, insurance arrangements, seasonal operation and an expectation of profit—support characterising activity as a trade rather than passive investment. These observations were described as practical indicators rather than definitive legal rules.