If an individual claims certain types of loss relief for ‘licence-related losses’, an income tax charge is made if there is a ‘relevant disposal’ (ITA 2007, s. 804ff.). The individual is taxed on the amount of income he is treated as receiving under these anti-avoidance provisions. The income is not treated as trading profits for tax purposes.

The tax charge arises (ITA 2007, s. 805) if:

the individual carries on a trade as a ‘non-active partner’ during an ‘early tax year’;

he makes a loss in the trade in that tax year;

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