IHT Business Property Relief and partnership property

The Law Reports and the decisions of the appellate Tribunals are of course essential reading for the professional tax adviser. The judges explain the application of the legislation to the fact of a particular case and a precedent is set. The decisions of the First-Tier Tribunal (FTT) may not be binding precedents, but unless and until overruled on appeal it is often convenient to treat them as precedents. Sometimes however, especially in the detailed fact-finding by the FTT, useful nuggets may be gleaned, suggesting an important point not directly relevant in other areas. In two cases involving IHT Business Property Relief (BPR), the Special Commissioners’ findings, agreed or apparently not resisted by the Revenue, highlighted particular features of the relief. They were not challenged by the Revenue – quite correctly. However, they did illustrate helpful, but perhaps counter-intuitive, features of the relief. Many readers will doubtless recall the facts in McCall v IRC [2009] NICA 12,which in some respects seemed worthier of a soap opera than a courtroom. The taxpayers failed in their appeals to the Special Commissioners and the Court of Appeal in Northern Ireland. This was on the ground that the business was an ‘investment business’, which was excluded from relief by s105(3) IHT Act 1984. All that is required is passive ownership of not active involvement in the business, however bizarre the circumstances in which it arose.

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Nov 1 2011

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