Finch and Others v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judgment Date | 02 December 1982 |
| Date | 02 December 1982 |
| Court | Chancery Division |
Chancery Division.
Mr. D. K. Rattee Q.C., and Mr. D. A. Shirley (instructed by Messrs. Lee & Pembertons) for the taxpayers.
Mr. J. L. Knox and Mr. J. F. Mummery (instructed by the Solicitor of Inland Revenue) for the Crown.
Before: Vinelott J.
Capital transfer tax - Notional transfer of assets on death - Relief for business property - Whether land on which business carried on a relevant business property - Whether land an asset used in business -Finance Act 1975 section 21Finance Act 1975, sec. 21-Finance Act 1975 section 2323; Finance Act 1975 schedule 4 subsec-or-para 14Sch. 4, para. 14(1),Finance Act 1975 schedule 4 subsec-or-para 14(2)Finance Act 1975 schedule 5 subsec-or-para 3Sch. 5, para. 3(1) - Finance Act 1976 schedule 10 subsec-or-para 2 section 3 subsec-or-para (1) section 6Finance Act 1976, Sch. 10, para. 2(1), 3(1), 6 - Finance Act 1981 section 100 subsec-or-para (3)Finance Act 1981, sec. 100(3).
This was an appeal by the taxpayers from a determination by the Board of Inland Revenue that farming land, deemed to have been transferred on the death of a life tenant, did not qualify for relief as property comprised in a business.
At the time of the life tenant's death, relief was available by reducing the value of relevant business property by 30 per cent. For the taxpayers it was contended that the value of the land used by the life tenant in his business activities of farming and forestry fell to be included in the value of the business, and so were eligible for relief. It was argued that the words "assets used in the business" contained in the Finance Act 1975 schedule 4 subsec-or-para 14Finance Act 1975, Sch. 4, para. 14(2), should be given their natural and ordinary meaning which would include land as such an asset. It was pointed out that, if land used by a life tenant for farming did not fall to be included within Finance Act 1975 schedule 4 subsec-or-para 14para. 14(2), the relief afforded by theFinance Act 1976 schedule 10 subsec-or-para 3Finance Act 1976, Sch. 10, para. 3(1), operates in a very capricious way since sub-para. (c) would include land as "relevant business property" if the life tenant had been in a farming partnership and had allowed the land to be used by that partnership.
Held, appeal dismissed.
1. The Legislature's purpose in including assets used for the purposes of a partnership in Finance Act 1976 schedule 10 subsec-or-para 3Finance Act 1976, Sch. 10, para. 3(1)(c) was clearly to cover the common case where, for instance, the owner of a farm enters into a partnership under the terms of which the partners are entitled to occupy the farm for the purposes of the partnership. The fact that extending the scope of Finance Act 1976 schedule 10 subsec-or-para 3para. 3(1) has an anomalous result of extending the relief to a case where a life tenant allows the settled land to be used by his partnership, does not aid the construction ofFinance Act 1975 schedule 4 subsec-or-para 14para. 14(2) of Sch. 4 to the Finance Act 1975.
2. Finance Act 1975 schedule 4 subsec-or-para 14Paragraph 14(2) is not open to the wide interpretation claimed on behalf of the taxpayers. If it were capable of bearing that meaning, it would be a provision "fairly and equally open" to more than one construction. Accordingly, it would be permissible to look at subsequent legislation to resolve any doubt as to its scope. TheFinance Act 1981 section 100 subsec-or-para (3)Finance Act 1981, sec. 100(3), effective in relation to transfers of value made after 9 March 1981, inserted a new sub-para. (d) Finance Act 1976 schedule 10 subsec-or-para 3in Sch. 10, para. 3(1) to grant relief for land which, prior to the transfer, was used for the purpose of a business carried on by a life tenant. That provision of the 1981 Act was clearly framed on the assumption that Finance Act 1976 schedule 10 subsec-or-para 3para. 3(1)(a) did not extend to land occupied by a life tenant and used for the purposes of a farming or forestry business.
Vinelott J.: This is an appeal against a determination by the Board of Inland Revenue made pursuant to Finance Act 1975 schedule 4 subsec-or-para 6para. 6(1) of Sch. 4 to theFinance Act 1975, that in relation to the notional transfer of value which under Finance Act 1975 section 22 subsec-or-para (1)sec. 22(1) of the Finance Act 1975, is to be treated as having occurred on the death of Mr. Edward Watkin Williams Wynn certain settled land of which he was tenant for life and which was used by him as to part for the purposes of a farming and as to part for the purposes of a forestry business carried on by him did not qualify for the relief afforded to property comprised in a business by Sch. 10 to the Finance Act 1976. The appeal is brought direct to the High Court pursuant to Finance Act 1975 schedule 4 subsec-or-para 7para. 7(3) of Sch. 4 to the 1975 Act.
The facts can be very briefly stated. The four Appellants (of whom the first-named died on 15 May 1982) were, and the last three named Appellants are, the trustees for the purposes of the Settled Land Act 1925, of a settlement known as the Coed Coch Estate Settlement which was constituted by the joint effect of the Will dated 10 April 1922, and proved on 29 November 1929, of the honourable Anne Gwendolyn Brodrick, who died on 8 September 1929, and of the Will dated 18 March 1959, and proved on 24 September 1963, of Miss Margaret Brodrick, who died on 20 December 1962. On the death of Miss Margaret Brodrick she was succeeded as tenant for life of the estate by Mr Edward Watkin Williams Wynn (to whom I shall refer as "the...
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