Charnley - Tribunal puts HMRC out to pasture in allowing business and agricultural relief

12 February 2020. Published by Michelle Sloane, Partner

In W Charnley and M Hodgkinson as executors of the estate of Thomas Gill (deceased) v HMRC [2019] UKFTT 0650 (TC), the First-tier Tribunal (FTT) confirmed that inheritance tax agricultural property relief (APR) and business property relief (BPR) was available in relation to Mr Gill's estate.


Mr Gill died on 20 November 2013. Mr Charnely and Mr Hodgkinson (the appellants) were executors of Mr Gill's estate.

Mr Gill owned Woodlands Farm (the farm), which consisted of:

• a house in which he lived;
• a yard, brick barn and outbuildings;
• 21. 19 acres of agricultural land (permanent pasture); and
• a range of buildings let for storage of commercial grass and cutting equipment.

Although Mr Gill did not own any live stock, he did allow farmers, who held an annual grazing licence, to graze their animals on his agricultural land. He had day to day involvement checking the livestock. He also grew vegetables on an acre of the land and sold and/or exchanged them at a local shop.

Upon his death, the appellants claimed APR and BPR, in relation to the farm.

HMRC refused the APR, except in relation to the agricultural land. This was on the basis that the house was not a "farmhouse" and did not constitute "agricultural property", within the meaning of section 115(2), Inheritance Tax Act 1984 (IHTA) and the other buildings were not occupied by Mr Gill for the purpose of agriculture such that section 117(b), IHTA, was satisfied.

HMRC also refused the BPR claim, on the basis that the farm was an investment in land, rather than land used for farming.

The appellants appealed to the FTT.

FTT decision

The appeal was allowed.

The FTT concluded that the farmhouse and other buildings were occupied for the purpose of agriculture and the business was that of farming and not wholly, or mainly, the holding of investments.

In the view of the FTT, the scope of the phrase "for the purposes of agriculture", in section 117, IHTA, was wide, and accordingly a restrictive approach should not be taken.

The FTT found that Mr Gill carried out the duty of a farmer, even though he did not technically own livestock on his farm. His activities were not carried out in order to let the land or prepare the land to let, which would be more akin to the activities of an investor rather than a farmer. The FTT disagreed with HMRC's contention that the land upon which vegetables had been grown was merely a 'vegetable patch', commenting that this argument failed to consider the history and intended use of the land and the evidence that crops had been grown on the land in the past.


This decision provides helpful guidance to those claiming APR and BPR. In making its decision, HMRC focused on each constituent part of the farm in isolation rather than looking at the property as a whole. It had failed to examine the history of the agricultural land. The detailed evidence of the agricultural use to which the property was put, which was relied upon by the appellants in support of their case, was critical to the success of their appeal.

The decision can be viewed here

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