BIM75455 - Trading losses: types of relief: relief for losses incurred in early years of trade: breaks in trade

An individual, who carries on a trade, may leave it for a time and then recommence it at a later date. In such circumstances the individual is not entitled to a new claim for relief under ICTA88/S381 when the trade re-commences because it is not then ’first carried on by him'. For example, a builder takes an extended holiday and then recommences; unless the break is regarded as the permanent cessation of the old business and commencement of a new one, relief under ICTA88/S381 will only be due by reference to the original date of commencement. For guidance on whether the break is a permanent cessation and recommencement or merely a temporary interruption of a continuing trade, see BIM70500 onwards.

The reference in ICTA88/S381 (1) to ’first carried on' refers to the specific business carried on by the trader and not to the generic category of trade. For example, a publican who had owned a pub in Leeds for many years sold it and bought another in York. Although in the everyday sense the trader remains a publican throughout, the York pub is not the same trade as the Leeds pub. Relief may therefore be claimed under ICTA88/S381 in respect of any loss sustained in the early years of the York business.

A partner who leaves a partnership and then rejoins at a later date is only entitled to relief under ICTA88/S381 by reference to the date he or she first joined the partnership, not the date of rejoining since it is the same business as that previously carried on.