In The Estate of Maureen W. Vigne (deceased) v HMRC [2017] TC06068, a livery business qualified for business property relief; to the lay person it looked and felt like a business therefore it was.
- Business Property Relief (BPR) provides relief from Inheritance Tax (IHT) on the transfer of relevant business assets at a rate of 50% or 100%.
- There is no BPR if the business or company is one of "wholly or mainly" in dealing in securities, stocks or shares, land or buildings or in the making or holding of investments; this is not relevant business property.
Mrs Maureen Vigne was the sole owner of 30 acres of land, Gravelly Way Livery stables but lived elsewhere:
- From 2008 she operated a livery business which was similar to DIY/grass only livery.
- She also offered services such as:
- The provision of worming products, including administering them where and when necessary
- Providing winter hay feed when the grass might not provide a sufficient food source; a hay crop was grown on part of the land.
- Removing manure from the fields in which the horses spent most of their time.
- Undertaking a daily check of the general health of each horse.
- A self employed yard manager was in place on a part-time basis.
- Planning permission was in place for use of the proprty in a livery business.
- Profits were made but they were very modest.
- In 2009 planning was requested to expand including on-site yard manager’s accommodation; permission was refused.
- On her death in 2012 Mrs Vigne’s personal representative claimed BPR; the asset constituted relevant business property and/or Agricultural Property.
- HMRC’s position was that if a livery business was being operated, which necessitates land being available for it to be viable, that was the holding of an investment and the entire business should be characterised as a business of holding investments.
The FTT allowed BPR. Citing George as the leading case in this area, it held that, to anyone unaware of the distinction between property and other businesses for IHT purposes, the activities being carried out looked and felt like a business, and not an investment, and therefore they were.
There was a recognisable livery business offering significantly more than the mere right to occupy a particular parcel of land.
On the secondary question of agricultural property the appeal failed, whilst part of the land had been used for hay crops it had not been so used in the two years leading up to the deceased’s death.
Comment
The tribunal gave a succinct analysis of the facts as presented to them without spending too long on the finer details and a common sense approach prevailed. However as an FTT decision on the facts it may be of little help by way of precedent, other than to those with a very similar fact pattern.
UPDATE: HMRC appealed against this decision, the Upper Tribunal dismissed the appeal.
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Business Property Relief (BPR)
Agricultural Property Relief (APR)
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The Estate of Maureen W. Vigne (deceased) v. HMRC [2017] TC06068
