Eva Mary Butler & Ors v The Commissioners for HMRC
[2023] UKFTT 872 (TC)
Dimitrakis G Demetriou & Anor v The Commissioners for HMRC
12 September 2024
[2024] UKFTT 830 (TC)
First-tier Tribunal
A woman's family tried to get inheritance tax relief on her fishing business. The tax court said no because even though she worked hard, her main income was from letting people fish on her land, which is considered an investment. They said the extra things she did, like giving advice to the fishermen, weren't enough to change this.
Key Facts
- •Mrs. Pearce ran a wild fishery business after inheriting it from her husband.
- •The business generated income solely from rod fees, allowing access to fish on her land.
- •The business transitioned from a stocked fishery to a wild fishery, impacting profitability.
- •Mrs. Pearce actively managed and maintained the fishery, including conservation efforts.
- •HMRC denied Business Relief, arguing the business was mainly holding investments.
- •The appeal concerned whether the business consisted 'wholly or mainly of making or holding investments'.
Legal Principles
A business is not relevant business property if it consists wholly or mainly of making or holding investments.
Inheritance Tax Act 1984, Section 105(3)
The determination of whether a business is 'mainly' holding investments is a question of fact, considering all activities in the round.
George v IRC [2003] EWCA Civ 1763; HMRC v Brander [2010] UKUT 300 (TCC)
Active management of an investment does not preclude it from being an investment business.
HMRC v Pawson [2013] UKUT 050 (TCC)
The nature of activities, not just the level, determines whether they are investment or non-investment.
HMRC v Pawson [2013] UKUT 050 (TCC)
Outcomes
Appeal dismissed.
The Tribunal found that while Mrs. Pearce undertook some non-investment activities (hospitality, advice), the core business of providing access to land for fishing for a fee was predominantly an investment activity. The maintenance and conservation efforts, despite their significant time commitment, were considered integral to maintaining and enhancing the investment's value.
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