Estate of M W Vigne v HMRC
Anyone with a Livery Business will have probably heard of the Vigne case by now.
Mrs. Vigne died in 2012 and her Executors claimed Business Property Relief against the livery business in her estate. Business Property Relief would mean that no Inheritance Tax was due on the Livery business to the extent that it qualified for the relief.
HMRC disagreed and said the Livery Business was a business which consisted mainly of holding investments, whereby Mrs. Vigne was making money from the land. Business Property Relief is not available for investment businesses. It is not enough to have a business for this relief. It has to be the right type of business and cannot be a business “wholly or mainly dealing in securities, stocks or shares, land or buildings or making or holding investments.”
We have had many cases over the years about caravan parks, property rental businesses and now we have a case about livery.
The First Tier Tribunal found in favour of the tax payer, which was nice to hear. However we could not yet rejoice as HMRC were of course going to appeal the decision to the Upper Tribunal.
Upper Tribunal Decision
We have waited with bated breath and can confirm that the Upper Tribunal dismissed HMRC’s appeal. That means the decision of the First Tier Tribunal stands and Mrs. Vigne’s livery business did qualify for business property relief.
Now it is important to remember that this does not mean all livery businesses will qualify for business property relief. Each case needs to be considered on its own merits. However it means that livery businesses could consider whether they can fall into the group of such businesses that will qualify, by offering added services.
There are different types of livery business. At one end is the Grass and DIY livery where very little service is provided, other than hay and water and is more akin to a property rental business. At the other end is full livery, where lots of services are provided. Then there is the middle grey area which is part livery. Mr. Vigne didn’t consider their business to fall neatly into any of those categories and it maybe fell somewhere between the DIY and part livery. The Vigne case at First Tier Tribunal went into quite some detail about the additional services provided and is now a useful reference when considering if a livery business is one that will qualify for business property relief or not.
Another positive case for the tax payer was a Furnished Holiday Lettings case
The Upper Tribunal case of Vigne follows not long after the decision at the First Tier Tribunal of Pers Reps of Graham (Deceased) case earlier this year. In that case a furnished holiday letting was considered to qualify for business property relief as a result of the extra services provided. However it is worth noting that in that particular case the additional service was more than most furnished holiday lettings provide and the Tribunal compared it to a small family run hotel.
So what we can take away from these cases is that just because your business is of a type which is generally considered to be an investment business, it doesn’t always follow that your actual business will follow suit. If you provide more services compared to similar businesses you may just be able to qualify for business property relief.
If you would like further advice on this area or a review of your business for inheritance tax purposes, please do not hesitate to contact us.