Matthew Hutton MA, CTA (fellow), AIIT, TEP, Presenter of Monthly Tax Review (MTR), highlights a potential difficulty concerning inheritance tax agricultural property relief claims involving farmhouses.
Matthew HuttonContext
The following points were made in a lecture by me at IBC’s IHT and Trusts Conference in London on 22 May 2008.
The latest moves
Following the most recent farmhouse case (Arnander), there have been indications that at least some offices within HMRC Inheritance Tax are following the traditional Valuation Office Agency line that the farmhouse must be occupied by the working farmer, that is APR can never be obtained on a house occupied by the landowner under a contract farming arrangement. Indeed, I have seen a letter dated 4 April 2008 from HMRC Inheritance Tax to a firm of solicitors that 'recent' case law has established that a farmhouse is 'the house in which the farmer of the land lives'.
The farmer in this context is the person 'who farms the land on a day to day basis', the authority for that given as the Lands Tribunal decision in Antrobus no 2. That must be wrong. Indeed, the Inheritance Tax Manual still states at IHTM 24047 that the farmhouse can be the place from which management operations are conducted. And, as I understand it, the powers that be at HMRC Inheritance Tax accept that in principle APR can be given on the house occupied by the landowner in a contract farming case. The difficulty of course is that no suitable contract farming cases have come before the Special Commissioners. The important thing is correctly to present the arguments following a death.
Cases which I have heard from Counsel are being challenged by HMRC typically involve an elderly partner who is not in reality in a position to make farming decisions. However, if that is not the case and real decisions are being made by the partner it seems that relief should still be forthcoming under a contract farming scenario.
The 7th Estate Planning Conference: Current Issues 2008 For the seventh successive year Matthew is running a series of full-day Conferences in 6 venues round the country, in the course of September and October 2008. Audience: Solicitors Accountants Tax Advisers Private Bankers Estate Planning continues to be an intriguing and interesting subject. But it is no mere intellectual exercise. For our clients, the advice we give and the decisions they make, if not exactly 'life or death', can have far-reaching consequences over a long period of time. Decided cases and developing HMRC attitudes (with reference to the Manuals, especially) must both be taken into account. Flexibility is essential in structuring the family assets. This series of Conferences will major on developments over the last year or so, putting them into context and drawing out the practical planning aspects. There will be plenty of time for delegate questions and discussion. Price: £295 plus VAT (Concessions: £25 discount for 2007 delegates OR '5 delegates for the price of 4'). Dates and Venues:| 4th September 2008 | The Cambridge Belfry - nr Cambridge |
| 18th September 2008 | Norton Manor Hotel - Sutton Scotney, nr Winchester |
| 25th September 2008 | Ansty Hall Hotel - Ansty, Coventry |
| 2nd October 2008 | Marriott Hollins Hall Hotel - Shipley, Bradford |
| 16th October 2008 | Aztec Hotel - Almondsbury, Bristol |
| 30th October 2008 | Jurys Great Russell Street Hotel - London |
Please register or log in to add comments.
There are not comments added