Night view of outside corridor with people walking to and fro.

Livery business qualifies for BPR for IHT purposes

05 December 2018.

In HMRC v Personal Representatives of the Estate of Maureen M Vigne [2018] UKUT 357 (TCC), the Upper Tribunal (UT), in dismissing HMRC's appeal, has confirmed that a livery business attracted business property relief (BPR) under section 105, Inheritance Tax Act 1984 (IHTA), as the business did not consist of wholly or mainly in making or holding investments.


At the time of her death, Ms Vigne (the deceased) owned 30 acres of land on which she operated a "DIY" livery business involving the provision of stables and fields for horses, with the owners undertaking their day-to-day care. She also provided a number of additional services, including worming treatments and the provision of hay in the winter months. 

The profits from the business were modest. After the deceased's death on 29 May 2012, HMRC refused her executors' claim for BPR under section 105, IHTA, on the basis that the business consisted "wholly or mainly of … making or holding investments", within the meaning of section 105(3) and accordingly was not eligible for BPR. 

The executors appealed to the FTT, which allowed their appeal and held that the deceased had been operating a genuine livery business. The FTT rejected HMRC's contention that the business consisted wholly or mainly of making or holding investments.

HMRC appealed to the UT. 

UT decision

The appeal was dismissed.

HMRC relied on a number of grounds, including:

1. no tribunal, acting judicially and properly instructed as to the relevant law, could have come to the conclusion that the deceased’s business qualified for BPR;

2. the FTT had incorrectly applied the principles derived from IRC v George [2003] EWCA Civ 1763 and McCall v HMRC [2009] NICA 12; and

3. had the FTT followed HMRC v Pawson [2013] UKUT 50, it would have concluded that the investment predominated. 

Ground 1 

The UT first addressed the question of its jurisdiction. Section 11, Tribunals, Courts and Enforcement Act 2007, provides for a right of appeal on questions of law only. Findings of primary fact by the FTT could be overturned by the UT only if the FTT had made a finding for which there was little or insufficient evidence. This emanates from a long-standing principle, first established in Edwards (Inspector of Taxes) v Bairstow [1956] AC 14. 

In applying that principle in the instant appeal, the UT said that in deciding whether the business consisted wholly or mainly in making or holding investments, the FTT was simply conducting a multi-factorial assessment on the basis of the primary facts it had found. Since none of the relevant primary facts had been disputed by HMRC, the UT could only overturn the FTT's decision if satisfied that it had applied the wrong legal test, or had plainly misapplied the correct legal test to the facts found. In the view of the UT, the FTT had applied the correct legal test and the conclusion it had reached was one it was entitled to reach.

Ground 2

The UT noted that in parts of the FTT's decision, it failed to refer to the "wholly or mainly" requirement in section 105(3) when stating the statutory test. However, on reading the decision "as a whole", it was clear that the FTT had had that requirement firmly in mind and had explicitly addressed the point in its final conclusion that the business provided a level of valuable services to the horse owners which precluded a determination that the business was mainly one of holding investments. 

Ground 3

HMRC sought to draw a number of parallels with Pawson, in which a claim for BPR on a holiday let failed before the UT on the ground that the services provided in connection with letting the property were not sufficient to make the business more than the holding of an investment.  

HMRC's criticisms of the FTT's decision were based either on the presumption that the business was essentially one at the "investment" end of the spectrum, or amounted to an assertion that the FTT had placed inappropriate weight on the factors it had identified when assessing whether the business was wholly or mainly one of making or holding investments. The UT concluded that there was not enough in those criticisms to justify any interference with the FTT's conclusion. There was no clear line between businesses which qualified for BPR and those which did not. The FTT had applied the correct legal test and had reached a conclusion it was entitled to reach on the evidence before it.  

In the view of the UT, iIt was overstating the position to argue that any business involving the exploitation of land should, as a matter of law, be assumed to be wholly or mainly a business of investment, unless the taxpayer could establish otherwise. 


This case underlines the difficulty that parties will face when seeking to challenge primary findings of fact on appeal. As the UT confirmed in this case that it will only overturn findings of fact where there has been a material and manifest error of law in the FTT's analysis and/or application of principle. The UT did not agree with HMRC that the FTT had erred in law and therefore refused to interfere with the FTT's findings.

With regard to when it is reasonable to make the presumption that a land-based business is one of investments, the UT said that "Pawson makes it clear that such an assumption only applies to owning or holding land in order to obtain an income from it". 

A copy of the decision can be viewed here.