A High Court judge has thrown new light upon the approach towards inheritance tax relief for “business property” in a ruling upholding the Inland Revenues decision that shares in a Home Counties mobile home site did not qualify for relief.
The case came to court following the death of the owner of the caravan site, located near the M25 in Hertfordshire. The Inland Revenues special commissioner took the view that the owners son could not claim relief from inheritance tax in respect of the 1,801 shares in the business she had left him because they were not “relevant business property” for the purpose of section 104(1) of the Inheritance Tax Act 1984.
In reaching this conclusion, the commissioner took the view that the business consisted mainly of “making or holding investments” for the purpose of section 105(3) of the Act.
The son challenged the commissioners decision in the High Court, arguing, in the light of Edwards v Bairstow [6] AC 14, that there was no evidence to support his conclusion.
At the hearing, the parties arguments revolved around the nature of the business. The judge found that the caravan site was entirely residential and gave the impression of a suburban residential development in miniature. The caravans had hidden wheels, and gave the appearance of small, neat bungalows with tiled roofs.
He determined that the business involved caravan sales, the receipt of income from pitch fees and the maintenance of the site, which has been valued at £700,000.
The son claimed that the receipt of pitch fees was ancillary to caravan sales and that this qualified the shares for relief.
However, the commissioner took the view that the pitch fees were not ancillary to sales and that, if anything, it was the caravan sales that were ancillary to the pitch fees. It was this view that had led to his finding that the business consisted mainly of making or holding investments.
Backing the commissioners approach, Lawrence Collins J said that the company operated a single business and that receipt of pitch fees was ancillary to caravan sales. He said of the commissioner: “He took all of the relevant matters into account, and reached a conclusion which was justified by the evidence.”
Weston v Inland Revenue Commissioners Chancery Division (Lawrence Collins J) 17 November 2000
Robert Argles (instructed by Vincent French & Browne) appeared for the appellant; Christopher Tidmarsh (instructed by solicitor to the Inland Revenue) appeared for the respondent.
PLS News 20/11/00
