Buildings used for agricultural purposes — Inheritance tax relief — Relief for agricultural land or pasture including woodlands — Whether agricultural land should have wide meaning to include buildings — High Court holding that agricultural land meant land without buildings used for agricultural purposes for inheritance tax relief purposes
B died in 1988. At the date of his death he owned Highways Farmhouse, Wigginton Heath, Oxfordshire, which comprised an area of two and a half acres and contained within it a substantial six-bedroomed house and an assortment of outbuildings, which had been used for agricultural purposes. The land had been used as 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 various times battery hens and a piggery. By the time of B’s death the emphasis was on beef cattle and arable farming, most of which was owned by a farming company except for the two and a half acres which B owned. On his death the Commissioners of Inland Revenue issued a notice of determination under section 221 of the Inheritance Tax Act 1984 on the ground 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.
Held The appeal was dismissed.
1. The expression “agricultural land or pasture” was a composite one. Pasture was undoubtedly bare uncultivated land used for the grazing of animals. The words “agricultural land” where used in association with pasture suggested land of a broadly similar nature, ie undeveloped land in the sense of land without buildings or other structures, used for agricultural purposes such as the cultivation of crops.
2. Limbs (2) and (3) of the definition in section 115(2) extended the primary meaning of “agricultural property” to include woodland and certain buildings if, but only if, they satisfied the conditions specified in those limbs. The types of property described in limbs (2) and (3), if they were to be included within “agricultural property” must be occupied in conjunction with “agricultural land or pasture”, within limb (1), owned by the transferor. If they were not they would not qualify as agricultural property notwithstanding that they might in fact be occupied and used for agricultural purposes.
3. On the evidence the two and a half acre site could not fairly be described as “agricultural land or pasture” when understood in that sense.
Gordon Apsion (instructed by Hancocks, of Banbury) appeared for the executors; Michael Furness (instructed by the solicitor to the Inland Revenue) appeared for the Commissioners of Inland Revenue.
