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HMRC internal manual

Inheritance Tax Manual

Character appropriate: Introduction

To come within the definition of ’agricultural property’ (IHTM24030) farmhouses, cottages and outbuildings must be ’of a character appropriate to the property’ IHTA1984/S115 (2).

Whether or not a residence or building is of a ’character appropriate to the property’ is a major issue that should be considered simultaneously with whether the farmhouse or cottage is occupied for the purposes of agriculture. Accordingly it would normally be appropriate to consult the VOA on this aspect before the occupation test has been resolved.

The words ’of a character appropriate to the property’ are ordinary English words. Parliament has not provided any specific criteria to be used in deciding whether the test of being ‘of a character appropriate to the property’ has been fulfilled. So, each case must be determined as a matter of fact and degree, having regard to all relevant material considerations.

The decision as to whether the farmhouse, cottage or farm building is of a character appropriate is one for Technical to take, following extensive investigation by and input from the VOA. The First-tier Tribunal will determine the issue if the point cannot be resolved by negotiation.