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HMRC's appeal on Business Property Relief case dismissed

View profile for Caroline Dowding
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You may recall, in August last year I wrote a blog on the case of Maurine W. Vinge (deceased) v HMRC 2017, which involved a significant win for the taxpayer against HMRC for successfully claiming Business Property Relief (BPR) on a livery business.

Mrs Vinge died in May 2012 owning 30 acres of land with livery stables. The executors applied for 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”.

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.

This decision was unsurprisingly appealed by HMRC, who argued that the First-tier Tax Tribunal had erred in law when ruling that “no properly informed observer could or would have said that the deceased was in the business of holding investments”. There was no disagreement that the deceased operated a business, but the differing opinions came when looking at the land involved in the livery business, which HMRC deemed to be holding of an investment and as such the entire business should be deeded as a business wholly or mainly holding investments, which would not qualify for BPR.

The taxpayer argued that the services provided by Mrs Vinge went over and above that of a normal livery business, as they provided provisions for worming products, provided hay feed in the winter and hay crops grown on the land, removed manure and completed daily health checks.

The FTT held that they were left in no doubt that the business was a genuine livery business which offered significantly more than the mere right to occupy a particular parcel of land, and that the provision of such services was inconsistent or incompatible with the operation of a business “holding investment”. The Upper Tribunal agreed with this on the basis they were satisfied the FTT applied the correct legal test and the conclusion reached was one which it was entitled to reach on the basis of the evidence provided.

However, the Upper Tribunal did note that it is irrelevant if they or another panel would have reached a different conclusion, which suggests that not everyone agrees with the ruling, which suggests that other judges hearing the same facts would not have found in favour of the taxpayer.

The areas of APR and BPR are complex, and recommend proper legal advice is sought if dealing with such matters. If you do require assistance, please contact me on 01206 217 394 or