“Agricultural and other rural trading businesses qualify for either agricultural or business property relief from inheritance tax but, for many years, the established position has been that livery yards do not qualify for either relief. A recent case in the tax chamber of the first-tier tribunal, published on 15 August 2017, has challenged that position”, advises Mark Sanders of Acorn Rural Property Consultants.
The case, which was taken to the tribunal by the personal representatives of the estate of Maureen Vigne, concerned the Gravelly Way livery stables in Buckinghamshire. The property had 11 stables and approximately 30 acres of pasture. It was operated as a DIY livery until 2008 when the nature of the business changed by the appointment of a self-employed yard manager who offered additional services to horse owners such as providing and administering wormers, providing hay made on part of the land, removing dung, carrying out daily health checks on the horses and calling out the vet if necessary. The yard manager worked around 20 hours per week and was paid through the business.
In 2009 a business plan was prepared to expand the business by putting up more stables and a temporary dwelling for the yard manager to enable the provision of part livery as well as the DIY livery. A planning application was submitted to the local planning authority but it was refused. Nothing therefore changed and the business continued to operate on a break-even basis with a turnover of just under £21,000. That was the position when Mrs Vigne died in May 2012.
The test for inheritance tax purposes was whether the stables and the 30 acres were wholly or mainly held by Mrs Vigne as an investment or whether the provision of the additional services mentioned above meant that they were used for business purposes and could therefore qualify for business property relief from inheritance tax. After reviewing the facts and previous tax cases, the commissioners concluded that Mrs Vigne was using the land and stables for business purposes and allowed the relief to be claimed.
“All cases turn on their own facts and, in this instance, the 2009 business plan and planning application was one of the factors that persuaded the commissioners that the property was being operated as a business”, says Sanders. “Nevertheless, this is a lead case that will result in many more livery businesses being able to qualify for business property relief from inheritance tax”, he concludes.
For further information please contact Mark Sanders at Acorn Rural Property Consultants on 01884 214052 or at firstname.lastname@example.org
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