Importance of trading for business property relief

Key points

• A dispute arose as to whether on the date of Mrs Butler’s death the business’s activities consisted of the holding investments (IHTA 1984 s 105(3)).
• A third party had been appointed to manage wedding days and provide catering.
• The case shows that farmers need to be careful when subletting out the management of any operation.
• Business property relief is an ‘all or nothing’ relief and there are some businesses that just fall on the investment-end of the business spectrum.

A new case on business property relief (BPR) and the ‘investment exclusion’ in IHTA 1984 s 105(3) highlights how important it is for farming businesses to pay careful attention to the tax consequences of diversifying. In Eva Mary Butler and others (TC8949) the focus was on a barn converted to a wedding venue. Better planning might have allowed the diversified business to obtain BPR. As it...