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HMRC loses landmark inheritance tax appeal

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HM Revenue and Customs (HMRC) has been refused permission to appeal against the decedents of Lord Balfour with respect to inheritance tax on his multi-million pound estate.

When Lord Balfour died on 27th June 2003, the estate included farms under the control of his family, farms which had been let out since the 1950s, woodlands and sporting rights, twenty six let houses and cottages and two sets of business premises.

Under Section 105 (3) of inheritance tax laws, a business or interest in a business does not qualify for the relief if the business consists wholly or mainly of operations which deal in securities, stocks or shares, land or buildings or making or holding investments.

In 2009, the First Tier Tax Tribunal allowed an appeal by Lord Balfour’s executors against a determination by HMRC denying business property tax relief for inheritance in respect of land, houses and cottages, which were let to third parties.

But the HMRC failed to convince the Upper Tier tax tribunal to reverse a decision granting the tax breaks, which can allow 50% or 100% relief.

“We are satisfied that on the evidence before him, Judge Reid was entitled to
conclude that section 105(3) did not apply because Lord Balfour s business at Whittingehame Estate did not consist mainly of holding investments,” Upper tier judges said.

“Having decided the questions raised by HMRC against them, we therefore refuse
the appeal.”

Inheritance tax law and the issues which surround them are often complex. If you’re unsure how they could affect a recent bereavement, consult with specialist solicitors today and make sure the taxman does not over step his reach.

HM Revenue and Customs (HMRC) has been refused permission to appeal against the decedents of Lord Balfour with respect to inheritance tax on his multi-million pound estate.

When Lord Balfour died on 27th June 2003, the estate included farms under the control of his family, farms which had been let out since the 1950s, woodlands and sporting rights, twenty six let houses and cottages and two sets of business premises.

Under Section 105 (3) of inheritance tax laws, a business or interest in a business does not qualify for the relief if the business consists wholly or mainly of operations which deal in securities, stocks or shares, land or buildings or making or holding investments.

In 2009, the First Tier Tax Tribunal allowed an appeal by Lord Balfour’s executors against a determination by HMRC denying business property tax relief for inheritance in respect of land, houses and cottages, which were let to third parties.

But the HMRC failed to convince the Upper Tier tax tribunal to reverse a decision granting the tax breaks, which can allow 50% or 100% relief.

“We are satisfied that on the evidence before him, Judge Reid was entitled to
conclude that section 105(3) did not apply because Lord Balfour s business at Whittingehame Estate did not consist mainly of holding investments,” Upper tier judges said.

“Having decided the questions raised by HMRC against them, we therefore refuse
the appeal.”

Inheritance tax law and the issues which surround them are often complex. If you’re unsure how they could affect a recent bereavement, consult with specialist solicitors today and make sure the taxman does not over step his reach.

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Written by Andrew Hodges

September 1, 2010 at 5:50 pm

Posted in Comment, LinkedIn

Tagged with ,

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