Business Property Relief case won by Tax Payer
- AuthorCaroline Dowding
In the recent case of Maureen W. Vinge (deceased) v HMRC 2017, the argument was won by the tax payer based on common sense, and could open the doors for other claims to be accepted in the future.
Mrs Vinge died in May 2012 owning 30 acres of land with livery stables. The Executors applied for Business Property Relief (BPR) on the grounds that the assets constituted as ‘relevant business property’ and/or Agricultural Property Relief (APR) on the grounds it constituted ‘agricultural property’.
HMRC argued that if the livery business is being operated, which necessitates land being available for it to be viable, that is nonetheless the holding of an investment and the entire business should be characterised as such. If this argument was accepted, then no BPR would be available, as reliefs are not allowed for business that are used wholly or mainly for investments.
The Taxpayer argued that the deceased did not operate an investment business nor did her business consist of “holding investments”.
The judges weighed up the arguments from both sides, taking into account services provided by the livery, which was more than a mere right to occupy the land.
From a common sense perspective, the Judge noted that he was satisfied that any objective observer who had visited the livery would have concluded that a business was being run from and on the land which provided services to those who kept their horses on the land and that no properly informed observer could or would have said that the deceased was in the business of mainly “holding investments”. As such, BPR was allowed on the value of the livery.
The same facts were applied to the application of APR, but it was held that such appeal would fail as there would not be enough agricultural activity to meet the necessary requirements.
This decision means that if it can be shown that specific services had also been provided, BPR may now be available and activities which have been challenged by HMRC in the past.
BPR and APR are complex areas, and therefore appropriate tax advice should always be sought. If you have any queries about Inheritance Tax reliefs, please contact our Agricultural and Estates team. I am based at our Colchester office and can be reached on 01206 217394 or at email@example.com.