HM Revenue and Customs has a
longstanding policy of not reopening settled cases, even when subsequent
decisions change the case law. So it was a significant victory for Doug Robshaw,
tax manager at Haines Watts in Hereford, and his client when they persuaded
HMRC to review a claim for Agricultural Property Relief (APR) on a farmhouse
and secure a rebate.
The decision to appeal was promoted
by the 2013 Tax Tribunal case (HMRC v Hanson) which successfully challenged
HMRC’s view that APR could not be granted on farm houses where the surrounding
land was not in common ownership.
The farmhouse was occupied by the
deceased’s son, who farmed the land, but the ownership of the land had been split
between family members. The tribunal found the occupation
of the land was also relevant in assessing eligibility and APR was therefore
granted on the farmhouse. The situation where farmland is not
in common ownership with the farmhouse is not usual, but HMRC’s willingness to
review settled cases is.
Although the client’s circumstances
were similar to Hanson – he owned and farmed the land but prior to her death
his mother owned and occupied the farmhouse – there was no guarantee that HMRC
would reopen the case which dated back to 2009.
However Doug, having previously
worked for HMRC for 12 years, had a good understanding of how the system works
and the best approach. “Having submitted the necessary
paperwork, I engaged with the tax inspector who originally handled the case and
there was a continued dialogue throughout the whole process. This was I was
able to move the case along and provide supporting evidence.”
“I think I was also assisted by a
general tide of good will towards a farming community facing adversities after
the recent floods.”
Both Doug and his client were
delighted when HMRC agreed to refund the Inheritance Tax paid on the farmhouse,
which amounted to £120,000 along with £9,500 of accrued interest.
Doug feels the decision opens the
doors for others to claim APR retrospectively.
But he added: “Each case needs to be assessed on its own merit.
Potential claimants need to ensure they get expert advice on whether to proceed
or risk incurring professional fees.”
For farm tax or agricultural advice contact Haines Watts North Devon and Haines Watts Rural Business LLP
www.hwca.com/accountants-north-devon
01237 471736
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