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HMRC internal manual

Inheritance Tax Manual

Interim reports: initial agricultural relief report

This instruction outlines the current procedure where the VOA (IHTM23002) considers that any land and buildings for which Agricultural Relief (IHTM24001) (AR) is claimed do not qualify as agricultural property (IHTM24030). The instructions currently apply to property in England, Scotland and Wales only. However, they may be extended to property in Northern Ireland in the future.

The role of the VOA (IHTM24165) in cases where AR is claimed is to advise on which land and buildings qualify as agricultural property and then to provide any valuations that may be required. Where these matters cannot be agreed it is us who must decide which cases should be pursued through the formal appeal procedures (IHTM23090).

If following inspection and after making any necessary further enquiries the VOA considers that all the land and buildings in respect of which AR has been claimed prima facie qualify as agricultural property, the VOA will proceed in accordance with the usual case procedures (IHTM23221). If, however, the VOA considers that any land and buildings for which AR is claimed do not qualify as agricultural property, an Initial AR Report will be sent to the caseworker, for the attention of TG. There will then be no further contact by the VOA with the taxpayer until further instructions are sent by TG, although if the case includes other properties for which the relief is not claimed the VOA will proceed with those valuations in the normal way. VOA aim to issue any Initial AR Report within 8 weeks of receipt of the case.

You should send any Initial AR Reports that you receive to TG (Nottingham), with the file. This includes Edinburgh and Belfast cases (which should be routed via Central Registry in Nottingham). Indigenous Scottish cases should also be routed via TG Edinburgh, to enable any specific Scottish law aspects to be considered. Given the need to ensure that these Reports reach TG as soon as possible, you should ensure that these Reports (and files) are noted and passed on immediately. They should not be added to existing work on hand for consideration in chronological order.

On receipt of the Initial AR Report TG will decide whether the claim for relief should be challenged. If not, they will settle the matter with the taxpayer on without prejudice grounds and notify the VOA that no further action in that respect is required. If the claim is to be challenged TG will issue further instructions to the VOA.

The VOA will then continue with negotiations in the usual way. If it becomes clear that agreement will not be possible, the VOA will report on the form VO 1103, seeking instructions on whether to prepare an Appeal Report (IHTM23090). In that instance, please re-refer to TG for further guidance.