While we patiently await the review from the Office of Tax Simplification in relation to Inheritance tax, the Courts have ruled against HMRC in a case relating to Business Property Relief.
The estate of the late Maureen Vigne was the estate in questions. The estate included a livery business in Buckinghamshire. HMRC argues that is should be considered a holding investment and it was not engaged in high levels of economic activity. HMRC failed to prove this at the Tribunal and it was held that the property was eligible for Business Property Relief.
The outcome of this case will have important implications for the livery and equine sections, the agricultural sector and potentially for those who rent of fully furnished holiday lets. By highlighting high levels of economic activity with these assets estates could save thousands in inheritance tax.
It also comes at a time where Inheritance Tax is in question. The Office of Tax Simplification have been asked to review Inheritance Tax in an attempt to help simplify the increasingly complicated tax. When the review was announced many suspected that Agricultural Property Relief and Business Property Relief could be the main targets of this simplification, with a risk that they may remove the relief completely. In light of the above ruling, are HMRC more likely to want to change the rules in relation to these reliefs? We will now have to wait and see.