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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Trade losses - types of relief: relief for losses made in early years of trade - breaks in trade

An individual who carries on a trade may leave it for a time and then recommence it at a later date. In such circumstances the individual is not entitled to a new claim for relief under S72 ITA 2007 when the trade re-commences because it is not then ‘first carried on by him’. For example, a builder takes an extended holiday and then recommences; unless the break is regarded as the permanent cessation of the old business and commencement of a new one, relief under S72 ITA 2007 will only be due by reference to the original date of commencement. For guidance on whether the break is a permanent cessation and recommencement or merely a temporary interruption of a continuing trade, see BIM80500 onwards.

The reference in S72(1)(a) ITA 2007 to ‘first carried on’ refers to the specific business carried on by the trader and not to the generic category of trade. For example, a publican who had owned a pub in Leeds for many years sold it and bought another in York. Although in the everyday sense the trader remains a publican throughout, the York pub is not the same trade as the Leeds pub. Relief may therefore be claimed under S72 ITA 2007 in respect of any loss made in the early years of the York business.

A partner who leaves a partnership and then rejoins at a later date is only entitled to relief under S72 ITA 2007 by reference to the date he or she first joined the partnership, not the date of rejoining since it is the same business as that previously carried on.