IHT Agricultural Property Relief – Occupation for the purposes of agriculture

Most of the litigation arising from the IHT Agricultural Property Relief (Chapter 2 Part V IHT Act 1984) has been concerned with the availability of relief for farmhouse. However, farmhouses are not the only category of residential property for which relief may be available. ‘Cottages’ are also included in the definition of ‘agricultural property’ in s115(2) IHT Act 1984. As with farmhouses, cottages must have been ‘occupied for the purposes of agriculture’ during the periods immediately before the death of the owner. For a farmhouse, or a cottage it is generally understood that the ‘occupation’ condition is satisfied by ensuring that somebody involved in the business is living in the house. What happens if, for health reasons, the person who lived in the house is obliged to live elsewhere? How long will the farmhouse or cottage continue to be regarded as ‘occupied for the purposes of agriculture’? The Upper Tribunal has now heard an appeal by the Revenue from a First-Tier Tribunal (FTT) decision in which a cottage was considered still to satisfy the conditions for relief some four years after the deceased farmer had been obliged to move into a care home HMRC v Atkinson [2011] UKUT B26 (TCC).