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.