IHT agricultural property relief – does the farmhouse qualify?

It is well known that the definition of ‘Agricultural Property’ which may qualify for relief under Chapter II of Part V of the IHT Act 1984, includes farmhouses. It is a requirement that, to qualify for relief, the farmhouse must be ‘of a character appropriate to the property’, case law, particularly the Special Commissioners decision in Lloyds TSB (pr of Antrobus) v IRC (2002) SpC 336 , has provided guidance for ascertaining whether or not a farmhouse is ‘of a character appropriate to the property’. However, this is not the only test to be satisfied. Before the question of appropriate character has to be addressed there will be the question of whether the house is a ‘farmhouse’, or something rather grander. Nor should it be forgotten that, however agricultural and appropriate the dwelling house may be, it cannot qualify for the IHT relief unless it has been ‘occupied for the purposes of agriculture’ as required by s117 (b) IHT Act 1984. All these issues were considered by the Special Commissioners in Annand and Others (Executors of McKenna deceased) v HMRC (2006) SPC 565.