Farmer wins inheritance tax case against HMRC

The HMRC have failed to overturn the decision of the First-Tier Tax Tribunal which held that a farmhouse and farm land do not have to be in the same legal ownership for a relief from inheritance tax to apply.

The ten year battle with the HMRC began when farmer Nick Hanson applied for agricultural property relief (APR) from inheritance tax on his farmhouse. The farming land and farming house were in different ownerships, and the HMRC contended that this prohibited Mr Hanson from obtaining APR - that the land and house had to be within the same legal ownership. The argument came down to  definitions of "esate" and "property", and a First-tier Tribunal held in favour of Mr Hanson, saying the house and land did not have to be in exactly the same ownership for APR on inheritance tax to be available.

The HMRC appealed that decision, but the Upper Tax Tribinal has now upheld the decision of the lower court, which could see an increase in applications on relief from inheritance tax from farmers who had previously been denied on the same basis of split ownership of land and house.

It is common in farming families for land to be passed on to sons and daughters, while the parents intend to live on in the farming home and stay involved with the day to day farming activity. In order for APR from inheritance tax to be approved, the farmhouse must be occupied for the purpose of agriculture.

If you require advice or information about inheritance tax, or any other tax matter, contact Wilson Nesbitt in Belfast or Bangor by calling 0800 840 9288.