A rare win for the farmer
One thing a sailor knows is that however hard the tide is running against you, in time it will slacken and run your way.
Over the past ten years, the tide has been going the Revenue’s way on the question of agricultural property relief on farmhouses. It has been clear for many years that the Revenue do not like giving inheritance tax relief on farmhouses and exempting them from tax. The Revenue have used a series of cases to limit the availability of tax relief and the circumstances where relief will be given.
As a result, today relief may only be available on about two-thirds of the value of the house. A key question is whether the house is actually occupied by the person doing the day to day farming of the land. They have also challenged relief where the farmhouse is particularly grand, or if the area of land owned and farmed with the house is particularly small.
The recent case of Golding is a rare win for the farmer. The farmhouse was not impressive. It was a small three-bedroom house in a poor state of repair. However, the land farmed was a smallholding of just over sixteen acres near Lichfield. Mr Golding had farmed it all his life. A lot of the produce was for his own consumption but he had continued to make small profits each year.
Normally, sixteen acres is not nearly enough land to support a claim for a farmhouse. Sure enough, the Revenue challenged the claim to relief on the farmhouse on the basis that the house was not of ‘character appropriate’. Was the farming operation on the land financially viable to sustain the house? They also argued that agricultural relief should only be available if the house would continue after the death of Mr Golding to be a working farmhouse. The First Tier Tax Tribunal have allowed agricultural property relief on the house. The Tribunal Judge pointed back to the earlier case of Antrobus and the range of different tests which are applied to decide whether a house qualifies for relief. It is not just a question of whether the farming operation is sufficiently profitable to support the house. There was also an acknowledgement that as farmers grow older and they become less productive, the reduction in profitability does not automatically mean the farmhouse will cease to qualify for agricultural relief. This is only the First Tier Tribunal and the Revenue may appeal, but perhaps the tide is turning…
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