For decades the Revenue’s approach when using land on which to keep horses has been that it is not agriculture, nor in many cases would it be regarded as a business for which business property relief on death would be allowed. Rather it is the nature of an operation which would fall under Section 105 (3) of the IHTA “land or buildings or making or holding investments”.
But we are a nation which invented the thoroughbred and for certain tax purposes stud farming does (with limitations) attract some relief.
However, the case of PR’s of Maureen Vignei v. RCC  UK FTT 632 (TC) came as a surprise in 2017. Mrs. Vignei used 30 acres of land for her livery business. It was run as a business and profits were declared. On death her estate sought agricultural property relief under Section 116. That claim failed but the estate also claimed business property relief (BPR) under Section 105. It was pointed out that the services provided were well in excess of the lower scale “Do It Yourself” livery. She provided hay, feed, had a crop of hay of her own which she used and there was the daily health check and other care. Somewhat contrary to previous decisions this standard and degree of care justified business property relief.
Historically farming businesses have been high expense and relatively low profit. Therefore when considering APR one has to consider HMRC’s view of farm losses over five fiscal years. On stud farms stud losses may extend to eleven years but the point is that no-one can or should expect to gain APR or BPR relief for a business which has simply lost money.
Unusually, therefore, many horse riding businesses declaring VAT may be a sensible thing if only as proof that the arrangements are a business not just a hobby.
I hope to do future articles to deal with this in more detail.
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24 January 2019