BIM75620 - Farming losses: restriction of relief after 5 years of losses
The five year rule only applies to trading losses arising from farming or market gardening activities. ITA2007/S67 (or ICTA88/S397 for CT) denies relief against general income etc (see BIM75605) where a loss computed without regard to capital allowances was incurred in each of the five years of assessment preceding that in which the claimed loss was incurred (see BIM75625). Section 67 does not apply to any other trades.
This provision was introduced in 1967 to complement what is now ITA2007/S66. Section 67 provides a more objective test and should be applied, subject to BIM75640 and BIM75645, in all cases where the conditions are satisfied.
While only farming in the UK is deemed to be a trade the five year rule is not restricted to UK based activities. Prior to 6t h April 2005 the definitions of those trades were extended, by subsection (5), to include activities carried on outside the UK. For IT purposes from the 6t h April 2005 the definition of farming was rewritten to exclude the UK restriction (ITA2007/S996) and consequently the extended definition for the five year rule is no longer required and has been omitted from ITA2007/S67-71.
