Mr G B Forbes v Commissioners for Her Majesty's Revenue and Customs

Facts

The appellant, Mr G B Forbes, was in full-time employment with Bovis Lend Lease and, from 2001, also carried on a boat chartering business. He conducted an initial feasibility study, began with a 37ft power boat and replaced it with a 43ft Fairline Targa, the boats costing between £200,000 and £250,000. Trade in the UK proved difficult, so in the summer of 2002 he moved the business and the vessel to Spain, engaging Vitesse Yacht Charters SL as his agent in the Balearics on a 20% commission. Charters were offered both as "bare boat" (unskippered) hire to suitably qualified hirers and as skippered hire with ancillary services such as catering and restaurant bookings. He claimed capital allowances on the vessel for the years ended 5 April 2003 to 2006 and set the resulting losses against his PAYE income under section 380 of the Income and Corporation Taxes Act 1988. HMRC, having obtained the Vitesse agreement on 28 May 2008, concluded that the chartering was predominantly bare boat leasing and that the losses were therefore restricted by section 384(6) of the Income and Corporation Taxes Act 1988. They amended the 2006 self-assessment under section 28A of the Taxes Management Act 1970 and raised discovery assessments under section 29 of the Taxes Management Act 1970 for 2003, 2004 and 2005. Mr Forbes appealed.