BIM75645 - Farming losses: let-out where farming part of larger undertaking

ICTA88/S397 (4) provides that relief is not to be denied where the loss-making farm or market garden is part of, and ancillary to, a larger trading undertaking. The subsection is designed to meet cases such as that of a butcher who makes a practice of fattening bullocks for his business, or a manufacturer who grows his own raw materials, or a seedsman or chemical manufacturer who runs a farm for testing or improving his products.

The phrase, `part of, and ancillary to' should be interpreted strictly. `Ancillary' means `subservient and annexed to' (see Croom-Johnson J in Cross v Emery [1949] 31TC198). It implies a close operating link with and contribution to the larger undertaking.