13 December 2018

Mrs Vigne owned thirty acres in Buckinghamshire, from where she ran a livery business. Following her death, her son, as her personal representative, claimed Business Property Relief (BPR). HMRC rejected that claim, on the basis that the livery was wholly or mainly an investment business. Mr Vigne appealed the HMRC decision to the First Tier Tribunal (FTT).

It was common ground that to qualify for BPR, the business must be wholly or mainly trading and previous cases have recognised that there exists a spectrum of business types ranging from a fully serviced hotel at one end (which would be trading), to long term lets with a passive landlord at the other (which would be treated as an investment). Cases therefore turn on where exactly a particular business falls on that spectrum.

At the First Tier Tribunal, Mr Vigne argued successfully that his mother was offering services over and above those which would usually be included in grass or DIY livery, such as worming the horses, providing supplemental hay as feed during the winter, removing manure from the fields and carrying out a daily health check on each horse. This led the FTT to find in favour of Mrs Vigne's estate.

HMRC appealed the decision to the Upper Tribunal (UT).

The Upper Tribunal cannot simply rehear the original case. It can only consider appeals where the First Tier Tribunal has made an error of law, or where it has misapplied the test to the facts of the case. Therefore in order to succeed in its appeal, HMRC had to persuade the Upper Tribunal on these narrow grounds.

The decision of the Upper Tribunal was that the FTT had applied the correct legal test and it did not misapply the test to the facts of the case. Interestingly, the Upper Tribunal judges commented that 'it is irrelevant whether we, or another panel of the FTT, might have reached a different conclusion' which suggests that whilst the Upper Tribunal had no grounds to allow the appeal, they might have reached a different conclusion had they been sitting in the FTT. Such are the uncertainties of litigation.

Time will tell whether this decision will see a loosening of the strict approach applied by HMRC in determining whether Business Property Relief applies to a business on the spectrum or whether it will remain as an outlier from the general run of cases where HMRC have been successful.

Key contact

Tom Hewitt

Tom Hewitt Partner

  • Private Wealth
  • Head of Estates and Land
  • Head of Food and Farming

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