• March 29, 2024
 Landmark Ruling On Business Property Relief To Help More Farmers

Landmark Ruling On Business Property Relief To Help More Farmers

The HMRC have been left reeling on Halloween following the nightmare ruling for them that could allow more people to protect their estates from inheritance tax.

Those of us with working land, like farm owners with diversified enterprises, are set to benefit from a ruling made against the HMRC in a case involving a livery stable.

The ruling will see more businesses being given the ability to protect their estate from the 40% inheritance tax on all assets over the value of £325,000.

Before the ruling on 31st October, holding investments were not viewed as income generating businesses, but as investments that are liable to inheritance tax.

The upper tribunal ruling agreed with the lower court definition of what they class to be an ‘active’ business as opposed to ‘wholly or mainly making or holding investments.’

The HMRC claimed that the estate of the late Maureen Vigne, who owned a livery business in Buckinghamshire, was mainly a stable and should be considered a holding investment as it was not actively engaged in high levels of economic activity.

The HMRC failed to show that Mrs Vigne was using the land primarily as an investment as opposed to a business. The first-tier tribunal found that the business provided additional services to horse owners in addition to stabling and grazing; making the property eligible for business property relief in addition to agricultural relief.

Peter Harker, partner with accountancy firm Saffery Champness, said: “The tribunal found 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.”

This will be of huge interest to those with holiday homes as well as those in the farming and equine industry. Providing additional services that highlight high levels of economic activity could enable them to save thousands in inheritance tax.

What will this mean for people with additional property like holiday homes? Will this ruling enable more people to save money on inheritance tax?

Martin Parrin