In Degorce v HMRC [2015] UKUT 0447 (TCC) the Upper Tribunal (UT) upheld the decision of the First-tier Tribunal (FTT) that Mr Degorce's film distribution activities did not amount to trading, with the consequence that he could not claim sideways relief for losses arising from those activities.
The UT observed that the question of whether a person is trading is essentially a question of fact, and that it should not interfere unless compelled to do so.
The UT recognised that there were various parts of the FTT's decision that could be criticised, and that its reasoning was difficult to follow. However, that was not enough to overturn the decision. Mr Degorce entered into a set of pre-arranged contracts knowing that it could have only one outcome – the right to a potential income stream. There was no element of speculation in the transactions. Hence, it was not a trade.
Mr. Degorce has sought permission to appeal to the Court of Appeal.
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