Last year the FTT considered a claim by the personal representatives of the estate of Maureen Vigne, for business property relief (BPR) on the value of the livery business she owned at her death (see our newsletter 4 October 2017). The Vigne estate won the case at the FTT, but HMRC appealed to the Upper Tribunal.
HMRC generally challenges claims for BPR by asserting that the business consists wholly or mainly of “dealing in securities, stocks or shares, land or buildings or making or holding investments”, and thus is excluded from the relief by IHTA 1984 s 105(3).
In the Vigne case HMRC accepted that the livery was a business, but it argued that it was a land-based business which was wholly or mainly one of making or holding investments. The court heard about all the services the livery provides for the horses, including providing horse blankets in winter, making sure the greedy horses don’t over-eat, and daily health checks for each animal.
The Vigne estate argued that the business had more in common with a children’s nursery than holiday lettings, for which BPR claims have been rejected (see Pawson case).
Although the UT agreed with the FTT that BPR was due, the judge stated that there was no bright line separating businesses which qualify for BPR and those that don’t. Thus, we still have no clear guidelines on when BPR can apply to a land-based business. The best approach will be to document all the services provided alongside the use of the land.
Written by the Tax Advice Network