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Many farmers and smallholders give over all or part of their land to equine livery, allowing horse owners to keep their equine friends on the land in exchange for payment. The level of provision of ancillary services will vary with DIY at one end of the spectrum (where only the land is provided) and full livery at the other end (where livery staff take full care of the owner's horse).
A recent decision of the First Tier Tribunal (Tax Chamber) considered the availability of business property relief for a livery yard business. Maureen Vigne (deceased) owned around 30 acres in Buckinghamshire, upon which she ran a livery yard business. The personal representatives sought to claim business property relief (and also agricultural property relief) on the land, but HMRC rejected this. The personal representatives appealed to the FTT.
The case turned on the interpretation of section 105 of the Inheritance Tax Act 1984, and whether the land in question should be properly designated "relevant business property" for the purposes of business property relief. Relief does not apply where the relevant business consists wholly or mainly of holding investments.
HMRC argued that if a livery business was being operated, which necessitated land being available for the business to be viable, that constitutes the holding of an investment and the whole land should be characterised as a business of holding investments - and therefore does not qualify for relief. The personal representatives of course argued that this was not the case, and that a genuine business was being operated on the land.
The Tribunal examined the factual evidence, explaining that a "fact and degree" assessment had to be made as to the reality of the activity going on the land. The Tribunal concluded that only limited livery services were provided, including the provision of worming products, and of hay during the winter months. However, it went on to say that the intention of the legislation was to exclude property where the underlying purpose or intention was investment, rather than as integral to some other business venture. For this reason the Tribunal concluded that this was a genuine and recognisable livery business offering more than a mere right to occupy the land. Business property relief applied and the personal representatives succeeded in the appeal.
As an aside, the Tribunal rejected the personal representatives' second contention that the land should qualify for agricultural property relief.
This decision will be welcomed by many land owners and indicates that where a taxpayer can properly demonstrate that valuable services are being delivered integral to, and in connection with, the land, business property relief might apply.