I am advised by Revenue that there are specific provisions relating to losses from a farming or a market gardening trade set out in section 662 TCA 1997.
In general, a trading loss incurred in farming or market gardening may not be set off against other profits unless the claimant can show that the farming or market gardening trade was operated on a commercial basis and with a view to profit. In addition to, and independently of, this test, loss relief is not available for set off in a fourth year if losses have been incurred in each of the three preceding years. Any loss arising in the fourth year may be carried forward for offset against future profits of the same farming trade but is not available for offset against other income under section 381 TCA 1997.
There are a number of exceptions to the above general rules, whereby the restrictions on loss relief will not apply in the following circumstances:
- where the farming or market gardening trade forms part of, and is ancillary to, a larger trading undertaking (Section 662 (2)(e));
- where the farming or market gardening trade was set up and commenced within the prior three tax years (Section 662 (5)); or
- where the person claiming the relief can show in the fourth year that the farming or market gardening activities are of such a nature, and carried on in such a way, that if undertaken competently, they would give rise to a reasonable expectation of future profits and that the business could not reasonably have been expected to become profitable until after the fourth year (Section 662 (2)(d)).