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IHT - Active Husbandry


Julie Butler - Expert Author

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15 August 2011

“Active” has become the important word in order for farming enterprises to succeed in a claim for Business Property Relief.

The inheritance tax (IHT) cases of Balfour (Earl of) v HMRC [2010] UK UT 300 and McCall (PN McCall & BJA Keenan (PR of Mrs McClean) v HMRC (2009) STC 990) show how important it is for the deceased to be both involved in the business and active in the farming enterprise.  The IHT case of Arnander (Arnander v HMRC [2007] RVR 208) which was a farmhouse case shows the importance of being an active farmer for Agricultural Property Relief (APR).  In this case the contract farming agreement was considered weak and the deceased’s farming involvement wasn’t mentioned in the obituary.

There is a parallel in the IHT cases with decisions that are currently being made about qualification for the Single Payment Scheme (SPS) commonly known as the Single Farm Payment (SFP).  The SFP is currently allocated on occupation.  There is much debate that new rules to qualify for the agricultural grant will include provisions for farmers to prove that they are actively involved.  The cynics promote that the delays in formally announcing active farmer provisions in the UK is because there are problems with both the wording and possibly with “public relations”.

For those landowners with other sources of income (and dedication of time) other than farming, there is an immediate and ongoing need to document the active involvement.  The deceased cannot present arguments themselves to HMRC once they die and there is a great need to keep photographic evidence, minutes of meetings and, where necessary, diaries of hours worked.

Contract farming agreements should again be reviewed and there is no time like the present (or after harvest) to tackle this problem and make sure clear proof of activity is available.

About the Author

Supplied by Julie Butler F.C.A. Butler & Co, Bennett House, The Dean, Alresford, Hampshire, SO24 9BH.  Tel: 01962 735544.  Email;, Website;

Julie Butler F.C.A. is the author of Tax Planning for Farm and Land Diversification of which the 3rd edition is to be published shortly (Bloomsbury Professional), Equine Tax Planning ISBN: 0406966540, and the forthcoming Stanley: Taxation of Farmers and Landowners (LexisNexis)


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Article Published/Sorted/Amended on Scopulus 2012-03-15 11:40:16 in Tax Articles

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