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Livery Business Qualified for BPR

5th October 2017 by

Business property relief (BPR) is a valuable relief that provides 100% or 50% relief from inheritance tax. To qualify, the property must be `relevant business property’.

There are two components for there to be `relevant business property’:

  • there must be real or personal property: and
  • it must be used in conjunction with a business.

However, certain businesses are excluded from the ambit of the relief, including those businesses consisting `wholly or mainly of …holding investments’.

In a recent case, the First-Tier Tribunal considered whether a livery business was to be denied BPR on the basis that the business comprised the holding of investments.

The Tribunal looked at the services provided by the livery business, such as the provision of worming tablets, the provision of hay during the winter months, the removal of manure and a daily health check. The question to be asked was whether the nature and extent of the services provided was such that it prevented the business from being mainly one of holding investments. The Tribunal found that while the business held investments in the form of land, the level of services provided meant that the business was not mainly one of holding investments. The accounts, while only showing a small profit, supported this. Consequently, BPR was available.

The level of business activity was crucial here – and what saved the relief. While HMRC seek to deny BPR for DIY liveries, they will allow it for full liveries.

For more information contact DFC accountants in Cardiff, Wales.

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julie.burrows@dfcaccountancy.co.uk
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Ffordd Pengam
Cardiff, Wales, CF24 2SA

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