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many family farms and landed estates there can be
considerable moving around of properties for a large number of reasons,
least the changing sizes of families as children leave the nest and as
families start. In
times when there have
been cashflow problems within the landed estate, selling residential
has helped farms survive, particularly if these qualify as the
private residence. This
can be from
moving from the original manor house to, say, the farm managerís house
selling the main house or the conversion of barns and making these
addition there is great scope to pass cottages down
to the next generation. One
is through the furnished holiday let property.
This can be passed to the next generation using the
holdover relief as
the furnished holiday let property qualifies for holdover relief
meets the right criteria, the number of days let etc.
The reality is that there is great potential
to develop farms, to downsize properties and to achieve this all within
very tax efficient principal private relief domain.
clear point is that in order to claim PPR relief
the occupation of the residence must be permanent and there must be
it having been permanent. It
enough for some temporary lodging situation and to then claim
PPR. There have been a large
number of tribunal
cases in the last few years on the question of PPR and they do show
have a hunger to verify that PPR claims are genuine and they do want
evidence of permanent residence.
farms and landed estates have involved properties
being swapped around between siblings and some quite strange ownership
arrangements which seemed necessary or sensible in order to sort out
arrangements and shares of the property at the time but some decades
could be inefficient with regard to principal private residence
relief. Many would argue that as
those properties are
not going to be sold it will not be necessary but it is still important
ensure that the relief is there if needed.
would then lead on to inheritance tax.
Does the ownership and residence of the farm
residential property give maximum relief for inheritance tax
purposes? There has been a case
which has recently
changed the view with regard to ownership of the farmhouse and
ownership of the
land and that is the case of Hanson.
Following on from the
success of Golding, the case of Joseph
Nicholas Hanson as Trustee of the
William Hanson 1957 Settlement (TC01791) has shown another
victory for the
taxpayer, although it is likely that the case will be appealed by HMRC.
case overturns the decision in Rosser
looking to the strict
interpretation of section 115 IHTA 1984 for agricultural property, and
that Agricultural Property Relief (APR) can be obtained on the
provided there is a match between the occupation of the farmhouse and
occupation of the land.
case the farmhouse was owned by a trust and it had been lived in by the
Hanson who farmed the land surrounding the property and he also owned
this land. The
ruling was that an APR
claim could be made for an asset even when its ownership has been
that of the farmland provided there is common occupation.
this occupation had been long-term, it had been since the 1970s and it
blatantly disagree with the decision of Rosser
looking at the strict interpretation.
action plan has to be for all farms and estates to
review ownership of the residential property to see that the position
potential claims for principal private residence relief and
Property Relief are protected to the best of the understanding at the
current time. It is
important at least to ascertain exactly
who owns which property.
About the Author
Supplied by Julie
F.C.A. Butler & Co, Bennett House, The Dean, Alresford, Hampshire,
Tel: 01962 735544. Email; firstname.lastname@example.org,
the author of Tax Planning for Farm and Land Diversification (Bloomsbury Professional), Equine
ISBN: 0406966540, and Stanley: Taxation
of Farmers and Landowners (LexisNexis).
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Article Published/Sorted/Amended on Scopulus 2012-07-03 11:17:05 in Tax Articles