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  • Katherine Bullock

Can horses be left to their own devices? Qualifying for Business Property Relief



It is clear that when it comes to businesses that rely on owning and letting land, HM Revenue and Customs have been indomitable over the last few years in denying claims for business property relief (BPR). BPR is extremely valuable in mitigating inheritance tax, providing in the right circumstances 100% relief. So, it is not surprising that taxpayers and their advisers see BPR as a valuable estate planning tool and are anxious to secure it.


Two recent cases whose judgements were published within weeks of each other provide interesting reading. Both are First Tier Tribunal cases and we will need to wait to see the outcome of any appeal. The first case concerned the estate of Mrs Ross. Mrs Ross had run a holiday letting business and it was recognised that the level of service both in terms of quantity and quality far exceeded those normally provided to guests. It was accepted by both parties that the services added up to a holiday experience that fell just short of a hotel. However, Mrs Ross' Executors claim for BPR was denied. It was held that a self-catering business was fundamentally different to that of a hotel because guests could, if they chose, be left to their own devices. The essence of Mrs Ross' business was therefore the provision of exclusive occupation of land in a beautiful part of Cornwall and no degree of services could change that.


"BPR is extremely valuable in mitigating inheritance tax, providing in the right circumstances 100% relief"

The second case concerned the estate of Mrs Vigne. Mrs Vigne ran a livery business, letting the land to horse owners on various different bases. Mrs Vigne also provided an exceptional level of service to the owners and horses that used the livery. Mrs Vigne's Executors were successful in their claim for BPR. There was a degree of responsibility that Mrs Vigne's clients expected and paid her to take for her equine charges. Horses after all cannot be left to their own devices.


Both Tribunals looked at the businesses in the round but took very different approaches to doing so. In Mrs Ross' case, it seems that the starting position was that there was an investment business and the Tribunal then looked for facts that would change that position. In Mrs Vigne's case, however, the Tribunal first looked at the facts and then having established those asked what type of business they were considering. Which approach is the right one? For now, it makes sense to consider both possible approaches in weighing up the potential success of any future claim for BPR and wherever possible to focus on the importance of activities over ambience and the degree of responsibility expected and taken.

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