Buildings used for agricultural purposes — Inheritance tax relief — Relief for agricultural land on pasture including woodlands — Whether agricultural land should have wider meaning to include buildings — High Court holding that agricultural land meant land without buildings used for agricultural purposes for inheritance tax relief objectives — Appeal against that decision dismissed
B died in 1988. At the date of his death he owned Highways Farmhouse, Wigginton Heath, Oxon, an area of two and a half acres. Contained within it was a substantial six-bedroomed house and an assortment of outbuildings, which had been used for agricultural purposes. The land was part of a moderately sized farm involving an area of between 150 and 200 acres, some tenanted and some owned. The farming operation included a dairy herd, beef herd, some arable land and at times battery hens and a piggery, most of which was owned by a farming company save for Highways Farmhouse.
On B’s death the Commissioners of Inland Revenue issued a notice of determination under section 221 of the Inheritance Tax Act 1984. They claimed that relief from inheritance tax was not available under section 116 of the Act because the property could not be described as “agricultural land or pasture” within section 115(2). That subsection defined agricultural property for purposes of the relief as “agricultural land or pasture” (limb (1)). It also included woodland and any building used in conjunction with the intensive rearing of livestock or fish, if the woodland or building was occupied with agricultural land or pasture, and the occupation was ancillary to that of agricultural land or pasture (limb (2)). Finally, it included: “cottages, farm buildings and farmhouses together with the land occupied with them of a character appropriate to agricultural property” (limb (3)). B’s executors appealed directly to the High Court against the determination contending that the word “land” in section 115(2) had the meaning given to it under Schedule 1 to the Interpretation Act 1978 and so included “buildings and other structures”. Accordingly, they argued that the property qualified for relief from inheritance tax. That appeal was dismissed: see [1994] EGCS 22. The executors appealed.
Held The appeal was dismissed.
1. The question was whether the definition of agricultural property in section 115(2) showed an intention that the word “land” should not include “buildings and other structures”.
2. It was necessary to stand back and consider the structure of the definition as a whole. With the exception of the inclusion of “woodland” all that followed the words “agricultural land and pasture” was concerned with the buildings of one sort or another which were to be included. In such a context it would be surprising to find that buildings were already included in the phrase “agricultural land or pasture”.
3. It was as though the draftsman had started with the land and then dealt with what should be treated as going with it. The general structure of the definition showed a contrary intention sufficient to exclude from the inclusions in the word “land”, otherwise required by section 5 of the Interpretation Act, the words “buildings or other structures”. It followed that the judge was right in his conclusion.
Gordon Apsion (instructed by Hancocks, of Banbury) appeared for the executors; Michael Furness (instructed by the solicitor of the Inland Revenue) appeared for the Commissioners of Inland Revenue.
