In a ruling that paints a clear dividing line between personal, familial and business relationships, a father who lost more than £300,000 in managing the careers of his professional golfer sons has failed to convince the First-Tier Tribunal that the deficits should be viewed as trade losses.
The father had sought to set off the losses he incurred in fostering his son’s careers against profits that he had made from the sale of a successful pharmacy business. Her Majesty’s Revenue and Customs (HMRC) disputed his claim, insisting that his work as a golfing manager was not in the nature of a trade.
Dismissing the father’s appeal, the Tribunal noted that his sons were his sole clients in his role as a golf manager. In the course of that activity, he had, over a seven-year period, generated a total gross income of £8,865 whilst incurring losses of £318,589.
The Tribunal accepted that it was an over-statement of the position to say that the father’s objective from the very start was to subsidise his sons and that various trappings of trade were added in an attempt to secure tax deductions.
However, the Tribunal nevertheless concluded that the management services that the father offered his sons would have been ‘so unappealing’ if offered to unrelated young golfers that there had been no chance of the activity being extended, in a genuine commercial trading manner, to anyone other than his sons.
The sums that the father had lost in supporting his sons’ careers were ‘effective subsidies’ to his offspring and were accounted for by a natural paternal desire to assist his sons ‘at whatever cost’ and not because his sons happened by coincidence to be the first two customers for a trade that was capable of being extended to others on a commercial basis.