The first-tier tribunal decision in Charnely vs HMRC centred on to what extent a 79-year-old Lancashire farmer could be considered to have been actively farming at the time of his death.
Broadly, HMRC argued he was leasing the land to a livestock owner and sitting back and taking the money, while his executors contended he remained actively involved in the maintenance of the farm and the welfare of the animals. If the former had been upheld, the farmhouse in which Thomas Gill lived would have been considered merely a house on a farm – rather than a ‘farmhouse’ – and therefore ineligible for APR (and likewise his other assets for BPR).
In the event – based on witness statements, farm records and the terms on which the land was let – Judge Jennifer Dean ruled Mr Gill had been actively farming until his death. She overturned HMRC’s decision, so allowing the whole estate to benefit from APR and BPR.
In times gone by, it is hard to imagine HMRC claiming that someone who lived in the farmhouse, cultivated vegetables for trade and owned nine tractors, two JCBs, a baler, an 8ft pasture topper, three scarifiers and an assortment of buckrakes, potato planers, discs, rollers and tools was anything but a farmer, albeit an elderly one.
This comes on the back of last year’s Office of Tax Simplification Review; with its recommendations to radically reform APR and BPR, and is another example of the continual pressure piled on these reliefs.
In this changing climate, early advice is more important than ever.