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HMRC internal manual

Inheritance Tax Manual

Business relief: Investment businesses: Other lettings

You will need to consider whether the exploitation of land ownership in other ways, such as self-storage, car parks, business parks, DIY livery, moorings or beach huts, is an investment activity.

The Court of Appeal in Northern Ireland considered the letting of grassland under agistment arrangements in the case of McCall and another (personal representatives of McClean deceased) v Revenue and Customs Commissioners [2009] STC990.

The deceased owned land consisting of a number of fields of grass. Her son-in-law looked after the fields. He inspected the fencing, gates and water supply, removed rubbish, unblocked drains, did emergency repairs to damaged fencing and tended the drinking troughs. He also informed the grazier of any problems he observed with the animals. This work amounted to about 100 hours a year. The graziers themselves fertilised the land.

The Court of Appeal found that the Special Commissioner had been entitled to find that the activities of the deceased were maintenance work necessary to allow the land to be let for grazing. The work was aimed at maximising the return from grazing, which represented income from the land for the deceased.

The absence of a full and exclusive right of occupation of the land by the graziers did not prevent the business being regarded as an investment business. The deceased’s business consisted of earning a return from agricultural land, the real and effective value of which was its grazing potential, and not from the provision of services. Accordingly, the Special Commissioner had been fully entitled to conclude that the business was wholly or mainly one of holding investments and to deny relief.