In Eva Mary Butler & Others v HMRC [2023] TC08949, the First Tier Tribunal (FTT) held that Business Property Relief (BPR) was not available for a business that rented out a barn for weddings. The level of services provided did not prevent the business from being wholly or mainly an investment business.  

In 2004, Mrs Helen Butler decided to diversify her farming business and move the use of a barn from agriculture to a wedding venue business.

  • The business was operated by a Limited Liability Partnership (LLP), the members of which were Mrs Butler and the trustees of her late husband's Will trust.
  • The LLP’s activities were farming, commercial lettings and a wedding venue business operating from an historic barn on the farm, Clock Barn. The wedding business was the most significant aspect of the LLP’s activities. The parties all agreed that the commercial lettings part of the business was investment activity and the farming non-investment activity.
  • Mrs Butler entered a relationship with Country House Wedding Venues (CHWV), which manages a directory of independent wedding venues. CHWV handled the marketing and social media for the business though the LLP produced the wedding brochure.
  • The LLP provided the wedding team who had direct contact with customers, initially, this was just Mrs Butler but the team grew to four including an event planner. The wedding team showed prospective customers around the property handling all aspects of the venue set up on the day, though the venue set up work was all taken on by the catering team in June 2013 when Mrs Butler became ill. After this, the wedding team continued to do only the initial showings of the venue.
  • Initially, the service and advice provided by the LLP were minimal, but this became more involved as Mrs Butler’s experience grew. For example:
    • Initially, customers could appoint their own caterer, but from 2009, they were required to use the caterer designated by Mrs Butler. The catering company dealt with customers directly over the catering for their weddings.
    • At an early stage in the wedding business, Mrs Butler obtained licences for the sale of alcohol and for music and dancing and the LLP offered the provision of tables and chairs, music systems, lights and a dance floor.
    • In 2014, a wedding venue licence was obtained and Mrs Butler began producing an event pack of checklists and summaries to provide to customers.
    • The LLP’s maintenance team undertook the cleaning of Clock Barn, the gardens and the car park before and after the events.
  • Mrs Butler died on 15 May 2015. 
  • Her estate submitted IHT returns claiming Business Property Relief (BPR) in respect of the interests in the LLP.
  • HMRC disputed that the LLP's assets were relevant property for BPR, denying relief. Mrs Butler’s executors Appealed.

The FTT dismissed the appeal finding that the interest in the LLP was not eligible for BPR as it was wholly or mainly a business of holding investments.

  • In order to determine whether the business qualified for BPR the FTT needed to consider if the services and facilities provided were categorised as non-investment activities by:
    • Looking at each element of the LLP’s wedding business, and then
    • Standing back and considering the activities of the LLP in the round and over time, from June 2013 to the date of Mrs Butler's death.
  • The judge looked at every aspect of the services provided and who provided them and found that:
    • At no point did Clock Barn provide amenities and services that went significantly beyond those that are provided in a property held predominantly for investment purposes
    • The Clock Barn business was akin to a village or community hall and was not comparable to a fully serviced conference venue.
    • Whilst the level of business activities was higher prior to the catering company becoming more involved in 2013 even then the business was still one of holding investments.

Useful guides on this topic

IHT Business Property Relief
A guide explaining what is Business Property Relief, when it can apply and pitfalls and planning points.

How to appeal an HMRC decision
Disagree with an HMRC decision? How do you appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

IHT: Estate planning checklist
This checklist covers some of the essential planning points that taxpayers should know when planning for their estate and Inheritance Tax (IHT).

External link

Eva Mary Butler & Others v HMRC [2023] TC08949

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