[2025] UKUT 061 (AAC)

The next issue is whether the Tribunal misunderstood the condition to entitlement that a claimant’s activities must be undertaken “with a view to the realisation of profits”. In my grant of permission, I said I considered it to be arguable that the Tribunal had failed to apply the proper test of whether the claimant’s trading activities were pursued “with a view to the realisation of profits” (my emphasis), and instead impermissibly substituted its own test of whether those activities had in fact realised profits.

The Tribunal’s reasons make extensive reference to the claimant’s historical losses over a long period. However, there is also a clear finding (see paragraph [36] of its statement of reasons) that the claimant’s futures trading was “not with a view to making any form of profit in either of the identified tax years or indeed in the recognisable future” (my emphasis again).

In his submissions, the claimant referred to the Tribunal misapplying the “intention to make a profit test”. That is to misquote the regulation. That the claimant rephrased the requirement in the 2002 Regulations that activities be undertaken “with a view to the realisation of profits” to “intention to make a profit” is telling.

The Tribunal appears to have accepted that the claimant had a genuine intention to make profitable trades, and therefore to turn a profit, but its finding that the futures trading was not “with a view” to profit indicates that it interpreted that phrase as meaning more than an intention to make profits.

So, what do the words “with a view to the realisation of profits” mean in the context of the 2002 Regulations? On a proper reading, they don’t require past profitability, or anything like certainty as to future profitability. What they require is more than just an intention or, to put it another way, a hope, of realising a profit: there must be a realistic expectation of profit in the foreseeable future and a credible plan of how to achieve it. Both were lacking in the claimant’s case.

Given his long and consistent history of losses (despite his claims to expertise in futures trading), and given the lack of any credible plan to turn things around, the Tribunal was entitled find that the claimant’s futures trading was not “with a view” to realising profit even though the claimant genuinely hoped to make a profit on his trades, and genuinely believed that he would.