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Farmers lose out in new definition of Agricultural Property Relief following HMRC tribunal victory




Farmers across the country will have to reconsider their old age living arrangements after an Upper Tribunal appeal hearing victory for HM Revenue and Customs (HMRC).

Reversing a previous success for the taxpayer in respect of Agricultural Property Relief (APR) from inheritance tax, a new legal line has been drawn on when accommodation is occupied for agriculture.

Jane Goold from Accountants and Business Advisers James Cowper explained: “Farmers will be alarmed by the new definition of ‘occupied for the purposes of agriculture.’ This reverses the earlier decision which allowed APR on a bungalow even though ill health had forced the occupant, the senior partner of a farming partnership, to move to a care home.”

Although the tribunal agreed that the bungalow had been agricultural property since it was built in 1966 they found that the connection between the use of the bungalow and farming ceased to be fulfilled when the senior partner, Mr Atkinson, moved to a care home four years before his death. In doing so the judges considered that the connection between the occupation of the property and the farming activities had been broken in light of the fact that he could never return to the bungalow due to ill health.

Jane added: “Mr Atkinson arguably retained a close connection to the business; he was part of the family farming partnership taking part in weekly discussions about the farm and remained in the partnership until his death. He also continued to keep his belongings at the property and visited occasionally. Nobody else moved in.

“Mr Atkinson’s executors were not represented at the appeal because they were concerned about costs, in particular the possibility they would have to meet the costs of HMRC if they lost. In passing their judgment the judges implied that if further evidence had been put forward the executors’ case might have been assisted. Many farming partnerships will face similar issues. If you are concerned about future APR, we strongly recommend professional guidance is sought so that matters are dealt with as early as possible and in the best possible way.”


James Cowper LLP is one of the Thames Valley’s leading firms of accounting and business advisers. It has offices in Newbury, Oxford, Reading, Southampton, Henley and London and a client base of over 3,000 businesses and private individuals. It advises a diverse range of businesses and private tax clients, ranging from start-up ventures to blue chip plcs and private individuals. James Cowper’s membership of Kreston International gives clients access to one of the world’s largest accountancy and business advisory networks, enabling the firm to deliver informed, strategic advice in an international as well as a regional and national context.

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