HMRC Tribunal Victory in Inheritance Tax Case

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The Upper Tribunal has recently published it's decision in relation to an important case, Atkinson V R & C Commrs (2011), where the availability of Agricultural Property Relief (APR) was at stake.

Mr Atkinson owned a farm and was a partner in a family farming partnership. He lived in a bungalow on the farm, before illness unfortunately meant he had to move to a care home. Although he continued to be a partner in the business, he was unable to return home, and he died some four years after becoming ill.

APR was claimed on the value of the bungalow he had lived in. The bungalow had been maintained as his home, with his possessions still in it, with post being collected regularly by his fellow partners. The Upper Tribunal reversed a decision of the First Tier Tax Tribunal, and decided that APR was not available on the value of the bungalow.

The key point to come out of the decision relates to the connection between the occupation of the property and the agricultural activities being undertaken. Mr Atkinson's health meant that he was unable to return to the property, therefore that link had been broken, even though he continued as a partner in the business and his possessions continued to be kept in the property.

Unfortunately in this case Mr Atkinson's executors were not represented at the appeal hearing, due to concerns about costs. We will never know if a different outcome would have resulted had they been represented and been able to present further evidence in support of their claim.

This case does highlight the need for all farming families to review (and review regularly) their IHT position. Circumstance can change, and so can the relief that is applicable.