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January 6, 2015

Carrying forward business losses – Harold Leslie Amah v HMRC

The case of Harold Leslie Amah v HMRC examined whether the taxpayer could carry forward a trading losses where there was a change in the underlying profession/business being carried on.

A company or organisation may make a claim for carry-forward trade loss relief if they have made a loss in a trade, enabling them to offset the losses against future trading income of the same trade.


  • Mr Amah had been a franchisee of retail opticians Dolland & Aitchison and maintained the business on his own account.
  • Mr Amah was a dispensing optician who acquired the lenses and frames needed for the spectacles sold to customers. He employed staff and he was also responsible for the premises from which the business was operated.
  • When the franchise ceased with unrelieved losses, Mr Ammah commended self-employment as a locum dispensing optician from his home premises, undertaking work on contracts for services direct with established opticians introduced to him by an agency.
  • Mr Amah sought to carry forward £15,838 of the losses from the franchise business to the new locum business

The Case

Mr Amah argued that his profession as a dispensing optician was the basis for his franchise operation as well as for his work as a locum. He could not have performed either role without being a fully recognised member of the Association of British Dispensing Opticians and in both cases he was self-employed as a dispensing optician.

In response to these arguments, HMRC pointed to the change of location of Mr Amah’s activities, the time gap between him ceasing employment with Dolland & Aitchison and the commencement of his employment as a locum and the disparate nature of the two businesses.

It was claimed that Mr Amah’s customer base with Dolland & Aitchison was wholly different from his customer base when working as a locum. While at Dolland & Aitchison the customers had been people who needed spectacles, the new customers were the opticians for whose firms Mr Amah worked.

HMRC argued that by reason of its commercial character, the Dolland & Aitchison franchise was a trade rather than the practice of a profession. By contrast, Me Amah’s locum work is accepted as the carrying on of a professional activity, and could not be regarded as a trade.


The tribunal stressed that this was not a question of whether Mr Amah set up a new business, but rather whether it was a new profession.

Mr Amah lost the case, and the tribunal found that Mr Amah's conduct at Dolland & Aitchison was carrying on a trade and not the practice of a profession.

The factors that the tribunal considered to very clearly indicate that his business activities were not a continuation of his profession at Dolland & Aitchison are detailed below:

i)                    There was a space of two months between the closure of the franchise and before Mr Amah took up work as a locum

ii)                   There was a change from a fixed location to an unpredictable variety of locations

iii)                 On termination of the franchise agreement, Mr Amah was prohibited from setting up a business in competition with Dolland & Aitchison within one mile. He also agreed not to act for previous Dolland & Aitchison customers for a period of 24 months

iv)                 There was a change in customer from individuals who were buying spectacles in the context of professional eye care to businesses which were seeking professional assistance

v)                  The franchise agreement was overwhelmingly expressed in the terms of a trade.

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