BIM62605 | Measuring the profits (particular trades): Nurseries and market gardens: restrictions on loss relief

Where losses are sustained in market gardening activities of an essentially uncommercial nature, relief may be restricted under:

() which denies relief against general income under where the trade was not run on a commercial basis and with a view to the realisation of profits (see and );

or

which denies relief under (which provides for the carry back of losses sustained in the commencing years of a trade) where the trade was not run on a commercial basis and with a reasonable expectation of profits within a reasonable time (see );

or

() which denies relief under (for losses incurred by companies) where the trade was not run on a commercial basis and with a view to the making of a profit or so as to afford a reasonable expectation of making a profit (see - );

or

() which restricts relief under where losses were incurred in each of the five previous tax years (see - );

or

which restricts relief under where losses were incurred in each of the five previous years (see ).

and both involve a test of commerciality. They should be used in the more extreme cases - for instance, where it is alleged that a trade is conducted on a comparatively small area of land adjoining the proprietor's residence and where the total sales are so low by reference to the cost of labour and other expenses that there can be no likelihood of a profit ever being realised.

provides a stricter test of commerciality and should be considered in any case where relief is claimed under in respect of what appear to be essentially uncommercial activities.

and are generally more straightforward as they involve an objective test. They apply, subject to - , in all cases where the conditions (see onwards and ) are satisfied.