BIM55725 | Farming: stud farms: losses in stud farms

S68(3) Income Tax Act 2007 (ITA 2007), S49(3) Corporation Tax Act 2010 (CTA 2010)

The guidance on farming losses at BIM85600 onwards applies equally to stud farming and other long-term ventures.
Under self-assessment for the 6th plus (i.e. 6th, 7th, etc) consecutive year of losses, farmers should assess the reasonable expectation of profit test as set out at BIM85640 and BIM85645

The requirement that the business should be potentially profitable (in other words, the question of whether S68(3) ITA 2007 or S49(3) CTA 2010 is satisfied) is important and should be checked in all cases.

Where the enterprise is clearly not being carried out on a commercial basis and with a view to the realisation of profits, a challenge under S66 ITA 2007 or S44 CTA 2010 which prohibit loss relief for uncommercial trades should be considered.