Investment in land

Business property relief on holiday cottages

The taxpayers claimed business property relief on eight holiday cottages and two staff flats. HMRC rejected the claim on the ground that the properties belonged to a business which consisted of investment in land and therefore they did not fall within the definition of business property.

The taxpayers appealed.

The First-tier Tribunal said the owning of land to earn rental income is an investment activity but it could include non-investment activities. The issue was whether the non-investment activities were more significant than the investment ones. This was a question of fact and degree.

The judge accepted that the deceased’s daughter had devoted a ‘significant amount of time’ to running the business. But this was not enough to show the character of the business was other than mainly an investment business. The test was qualitative – about the nature of the business – rather than...