HMRC appeal fails to overturn determination on Business Property Relief in livery case

1 Nov 2018

tree in field

The Upper Tribunal yesterday dismissed the appeal by HM Revenue & Customs (HMRC) against the determination last year in favour of representatives of the estate of the late Maureen Vigne. In that case the First Tier Tribunal (FTT) had determined that the Vigne Estate was entitled to inheritance tax Business Property Relief (BPR).
Crucial to that case was whether 30 acres or thereabouts used for livery was business property or whether it constituted ‘making or holding investments’.

The FTT had determined that the deceased had run a business and that the property in question should be determined as “business property associated with and necessary for carrying on that business” and that the services provided were over and above those included at the lower scale of livery provision – grass livery, and DIY livery as well as other services.

In its appeal, HMRC had argued that the services offered as part of the business in association with the right to occupy land were less extensive than those in a number of other FTT decisions in relation to holiday accommodation, self-catering and business centre tenancies where activities of the property owner were found to be “wholly or mainly the making or holding of investments”.  They said that in the Vigne case the FTT had applied the wrong legal test and that the Upper Tribunal should intervene to ensure a consistent approach.

Peter Harker, a partner at Saffery Champness and a member of the firm’s Landed Estates and Rural Business Group, commented:

“This is good news for rural businesses and their advisers who have been waiting for the outcome of this case with great interest. This case sets an important precedent around the level of services/activities that need to be undertaken by a business to qualify for BPR and having clarity now that HMRC’s challenge has failed is very welcome.

“Despite arguments that the additional services were not of a sufficient nature for the business to qualify for the relief, the Upper Tribunal said that it was satisfied that the FTT had applied the correct legal test and its conclusion was one that it was entitled to reach on the basis of evidence given.

“The Tribunal found that HMRC had failed to show that the purpose of holding the land as an investment had taken precedence over what was a business of keeping horses at livery. The outcome of this appeal has important implications not just in the livery/equine sector but also for furnished holiday let businesses where parallels have been drawn – albeit in this case the guests were horses and not people!”