Business property relief ownership and activity

The decision of the Court of Appeal in Northern Ireland in McCall v HMRC (2009) NICA 12 is noted in ‘From the courts’ on page 3. This is an appeal from the Special Commissioners’ decision reported at (2008) SpC 678. The question at issue was whether IHT business property relief was available for land that was subject to what the Editor will describe as ‘grazing agreements’. Such agreements, under which the owner of livestock to graze is permitted by a landowner to graze them, are often described colloquially using the language of landlord and tenant and, indeed, in the HMRC IHT Manual it has been suggested that such arrangements will often be farm business tenancies. However, in practice, most such arrangements are entered into by means of a license, rather than a tenancy. Before September 1995, this was necessary to ensure that the grazier would not be entitled to security of tenure under the Agricultural Holding Acts. This is no longer such a major issue, but many landowners and their advisers are aware that, if the landowner grants a licence and reserves to himself the activities of cultivating the grass as a crop, he may be regarded as carrying on the trade of farming.