The value of investments and any income from them can fall and you may get back less than you invested.

HMRC loses business property relief appeal in Vigne case


HMRC’s appeal against an earlier First-tier Tax Tribunal (FTT) decision in the inheritance tax (IHT) business (property) relief case of the Estate of Maureen W Vigne v HMRC [2017] UKFTT 632 (Vigne v HMRC) has been dismissed by the Upper-tier Tribunal (UTT).

Business property relief is hugely valuable to taxpayers, particularly on death. However, IHTA 1984, s105(3) denies relief for businesses which ‘consist wholly or mainly of… dealing in securities, stocks or shares, land or buildings or making or holding investments’.

In Vigne v HMRC the FTT had to consider whether relief should be given in respect of 30 acres of land used in a livery stable business run by the deceased Mrs Vigne.

In broad terms, HMRC’s position was that although the deceased undisputedly carried on an active business, this did not detract from the fact that the business was mainly of an investment nature consisting of nothing more than the letting or licensing of land for the use of others (in this case horses).

However, the FTT found that the deceased’s business amounted to significantly more than this as she also provided valuable additional services that were not routinely provided in the course of the lower levels of livery. Veering slightly away from the ‘Pawson’ test, the FTT judge granted relief on the basis that:

“...any objective observer who had visited the site… would have concluded that a business was being run from …the land …. and that no properly informed observer could or would have said that the deceased was in the business of “holding investments”."

Appealing against the decision, HMRC argued that the services offered as part of the business in conjunction with the right to occupy land were less extensive than those in a number of decided cases in relation to holiday accommodation, where the property owners were found to be “wholly or mainly the making or holding of investments” despite additional activity.

They said that if similar accommodation and services were provided to humans rather than horses, relief would have been denied and that it was anomalous that the result should be different simply because the accommodation and services were provided for horses; and that the FTT had applied the wrong legal test in reaching their conclusion.

However, the Upper Tribunal said that it was satisfied that the FTT had applied the correct legal test and its conclusion was one that it was entitled to reach on the basis of evidence given.

The outcome of this appeal has important implications, not just for livery businesses, but also for furnished holiday let businesses where similar considerations arise, and it will be interesting to see whether the approach suggested by the Tribunal in the Vigne case will be followed in future ‘grey area’ cases.

It is however important to note that the decision in Vigne does not necessarily mean that satisfying the test for business relief has become easier – particularly as the tone of the Upper Tribunal’s decision suggests that had it been responsible for the initial ruling, then based on the facts presented it may well have found in favour of HMRC!


Please note that this document was prepared by a third party and as such Brewin Dolphin is not responsible for the content or able to answer queries on the topics dealt with. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change. Therefore you should not rely on this information without seeking professional advice from a qualified tax adviser, who should also be able to assist you with any questions on the content.

This document was prepared as a general guide only and does not constitute tax or legal advice.