Retirement relief – Taxpayer leasing land to farming company – Taxpayer disposing of land on reaching 60 years of age – Whether retirement relief available – Whether asset disposed of required to be asset from business of individual making disposal – High Court refusing taxpayer’s claim – Appeal allowed
On 29 January 1988 the taxpayer, aged 60 years, disposed of 163 acres of agricultural land, known as Mayfield Farm, Besthorpe, Norfolk. Until the disposal the farm had been used for a farming business carried on by the taxpayer’s private family company. The company had owned the business for 40 years, and at all material time was a trading company with the taxpayer as a full-time working director. The company paid rent to the taxpayer for the use of the land. On the disposal of the land, the company ceased to trade. The taxpayer did not dispose of his shares in the company or make any other disposal capable of constituting an ‘associated disposal of assets’ within the meaning of section 70(7) of the Finance Act 1985.
The taxpayer claimed retirement relief in respect of the disposal of the land under the Act as a ‘material disposal’ of a ‘disposal asset’, and appealed to the special commissioner against the refusal of that relief. The special commissioner dismissed the appeal and the taxpayer appealed to the High Court. The judge dismissed the appeal, holding that, having due regard to the overall scheme of sections 69 and 70 of the Act and Schedule 20 to the Act, and reading section 69(2)(b) in its context, the business referred to in section 69(2)(b) had to be the business of the individual making the disposal, and not a family business. The taxpayer appealed.
Held: The appeal was allowed.
The question of to whom the discontinued business must have belonged, if relief was to be granted when there was a disposal of assets formerly used in the business, was to be found in section 69(4)(a) of the Act. The requirement was that ‘throughout a period of at least one year ending with the date on which the business ceased to be carried on… either the business was owned by the individual making the disposal or paragraphs (a) and (b) of the subsection (3) above apply’. That could not be read as imposing a strict condition of individual ownership at the moment of cessation and a less strict condition, namely individual or family company ownership, during the preceding period of at least one year. Accordingly, the taxpayer was entitled to the relief claimed.
Patrick Soares (instructed by Cameron McKenna) appeared for the appellant; Michael Furness (instructed by the solicitor to the Inland Revenue) appeared for the Revenue.
Thomas Elliott, barrister
