In The Trustees of David Zetland Settlement v HMRC TC02690 [2013] the FTT agreed with HMRC's refusal to give IHT Business Property relief (“BPR”) on the grounds that the activity of owning and running serviced offices was “mainly” one of dealing in land or making or holding investments.

BPR is not available in respect of a business, or shares in a company that is:

  • Engaged wholly or mainly in dealing in securities, stocks or shares, land or buildings or in the making or holding of investments (see IHT Business Property relief)

The Appellants were trustees of a settlement with assets which had a combined value of approximately £6 million. They owned commercial buildings which were divided into units. These were let to tenants for different periods of time ranging between one and five years.

  • A large number of services and facilities were provided under each lease. The landlord supplied WiFi internet, cleaning, bike parking and security. There was also a gym, gallery, café and hairdressers.
  • The landlord engaged full-time and part-time staff including a manager, handyman, solicitor and secretaries and it concluded that this level of active management made this an active business, rather than one engaged wholly or mainly in the passive activity of property letting.
  • The tribunal looked at the individual facts of the case and considered the taxpayer's activities considered "in the round". They did not agree and refused BPR.


Given the level of activities provided by the landlord this probably seems a surprising decision for the taxpayer. HMRC do not regard decisions of the FTT as binding unless the facts of any case are the same (or unless it suits them!).