BIM75701 - Trading losses: restriction of relief for losses

There is no relief under ICTA88/S380 unless a trade, profession or vocation is carried on on a commercial basis and with the view to the realisation of profits, (ICTA88/S384 (1)).

Before applying the test in ICTA88/S384 the first matter to be considered is whether the activities that are being carried on actually amount to trading. If the activities are not trading then the losses are not available for relief. See BIM20050 onwards in relation to what constitutes trading activities.

If the activities do indeed constitute a trade it is then necessary to apply the test in ICTA88/S384, see BIM75705.

As regards the restriction of loss relief claimed under ICTA88/S381 (losses in early year of trade) see BIM75715.