A farmer who claimed that tax law on the “averaging” of profits for tax purposes breached his human rights has lost an appeal in the upper tribunal. Nick Huber reports.
Percy Donaghy, a farmer and agricultural contractor, made a trading profit from his farming business of £20,244 in 2005/6 and suffered a loss of £10,315 in the following tax year. Part of the reason for the fluctuation in profit over the two tax years was Donaghy sold farm machinery towards the end of 2005, and bought replacement machinery in 2006 after the start of the 2006/7 tax year.
Donaghy tried to average both his profit and loss for the two years, under chapter 16 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA). He calculated that his profit and taxable profit 2005/6 and 2006/7 was £5,964.50 in each year.