Falmer Jeans v Rodin

Ch D 1990, 63 TC 55; [1990] STC 270

A third party company manufactured jeans for Falmer Jeans Ltd but accumulated trading losses and ceased trading. Falmer acquired the trade and operated it as a separate cost centre and claimed relief for the trading losses brought forward against its own profits. The Inland Revenue denied the claim, contending that Falmer had acquired only the base activities and not the trade.

It was held that Falmer had taken over the trading activities of the manufacturing process and was entitled to relief for the brought forward losses.