Inheritance Tax Tribunal case
The First-tier Tax Tribunal recently heard an appeal concerning the availability of business property relief.
The main issue before the Tribunal was to determine if the replacement property provisions contained in section 107 of the Inheritance Tax Act 1984 were applicable to the deceased’sestate.
The deceased, Lord Balfour, who died on 27 June 2003 had established a farming partnership in 2002 with his intended successor. Following his death, issues arose as to how the activities of the Estate were run prior to the establishment of the partnership. One particular issue, which featured prominently in the evidence, was whether the Estate was run during that period as a single unified business or whether there were separate businesses run by Lord Balfour on the one hand, who then enjoyed a life rent over the whole Estate, and the Estate Trustees on the other hand.
The Chairman allowed the appeal on the basis that prior to the establishment of the partnership the Estate was managed as a single business. Lord Balfour took de facto responsibility for running all aspects of the estate and either made the business decisions himself or made recommendations to the trustees which they invariably approved. The Tribunal rejected HMRC’s arguments and quashed the Notice of Determination.