IHTM25274 | Business relief: Investment businesses: Land as a business asset
From HM Revenue & Customs · Inheritance Tax Manual
Land may be included as an asset of the business, in which case can apply, or it can be owned by a partner or shareholder separately from the respective partnership or company that occupies it when might apply.
Where the land forms part of a business interest then clearly if applies no part of the business interest will attract relief.
Where the land and business interest are held separately then, if applies, neither the land nor the business interest attract relief.
In some cases you may need to examine closely how the land has been treated but do this only where evidence indicates that a different treatment of the land to that proposed by the taxpayer is needed. by an individual partner. For example, land may be shown as partnership property in the accounts, but be beneficially owned by an individual partner. You will need to establish the true beneficial ownership by looking at the evidence.
Additionally, if you are satisfied that no business existed, then the purported business interest will not be entitled to the instalment option though land held separately may qualify for instalments.
If it is accepted that a business existed but applies, instalments will nonetheless be available and with the benefit of interest relief. (Although companies to which applies do not qualify for interest relief.)
Whilst the principles involved in invoking in respect of these businesses are broadly the same, the types of lettings have their own individual peculiarities and each will be discussed separately.
The interpretation and application of has now been tested before the Special Commissioners in the estates of Violet Moore () (commercial premises), Bertha Burkinyoung () (furnished lettings) and also Weston v IRC (2000) STC 1064 and Stedman v IRC [2002] WTLR 1357 (caravan parks).
This last case was eventually decided in the Court of Appeal as IRC v George (2003) EWCA 1763 (). More recently, the tribunals and courts have heard a number of cases involving different types of businesses which HMRC has viewed as investment businesses. These cases are considered at (serviced offices), (holiday lets) and (grazing lets).
In the George case, the Court of Appeal observed that the decision in Moore was right on its facts. It also quoted with approval the Special Commissioner’s view in the George case that there was a wide spectrum of business activity with investment activity at one end and trading activity at the other. It also agreed with the Special Commissioner’s view that previous decisions have been very much decided on their own facts.