The Commissioners for HM Revenue and Customs v The Personal Representatives of Nicolette Vivian Pawson (Deceased)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Henderson |
| Neutral Citation | [2013] UKUT 050 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,28 January 2013 |
| Date | 28 January 2013 |
| Published date | 01 December 2016 |
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[2013] UKUT 050 (TCC)
Appeal number: FTC/36/2012
Inheritance tax – business property relief – holiday letting business
of a bungalow carried on for profit – whether the business consisted
mainly of holding an investment – whether the FTT erred in law in
concluding that it did so consist – appeal allowed
UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER)
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Appellants
- and -
(1) FRANCESCA LOUISE THORESBY LOCKYER
(2) CAROLINE VANESSA THORESBY ROBERTSON
(as the Personal Representatives of NICOLETTE VIVIAN PAWSON, Deceased)
Respondents
TRIBUNAL: MR JUSTICE HENDERSON
Sitting in public at the Rolls Building, London EC4A 1NL on 18 December 2012
Dr Christopher McNall, instructed by the General Counsel and Solicitor to
HMRC, for the Appellants
Mr Keith Gordon and Miss Ximena Montes Manzano instructed by Pawson &
Co for the Respondents
© CROWN COPYRIGHT 2012
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DECISION
Introduction
1. “Fairhaven” is a large bungalow overlooking the sea on the Suffolk coast near
Aldeburgh. At the date of her death on 20 June 2006 Mrs Nicolette Vivian
Pawson (“Mrs Pawson”) owned a 25% beneficial interest in the property. The
remaining 75% was owned equally by her three children: Mrs Francesca
Lockyer and Mrs Caroline Robertson (who were also her executors), and her
son Mr Nicholas Pawson.
2. Mrs Pawson’s share in the property formed part of her estate for inheritance
tax (“IHT”) purposes, and in due course her executors claimed that it qualified
for 100% relief as “relevant business property” within the meaning of Chapter
1 of Part V of the Inheritance Tax Act 1984 (“IHTA 1984”) as amended
(sections 103 to 114). The basis of the claim, briefly stated, was that
Fairhaven had been used for the two years preceding Mrs Pawson’s death for
the purposes of a holiday letting business carried on for gain, with the result
that her share in the property consisted of “a business or interest in a business”
within section 105(1)(a) of IHTA 1984; and that her share was not disqualified
from being relevant business property by section 105(3), which provides so far
as material that:
“A business or interest in a business … are not relevant
business property if the business … consists wholly or mainly
of … making or holding investments.”
3. The claim was debated in correspondence but was ultimately rejected by the
Commissioners for Her Majesty’s Revenue and Customs (“HMRC”), who
issued a notice of determination on 1 October 2008 saying that “none of the
value transferred in respect of the deceased’s share in “Fairhaven” … was
attributable to the value of relevant business property”. The executors
appealed against the notice, and the determination was also reviewed by a
senior officer of HMRC’s Trusts and Estates office in Nottingham, Mr Robert
Brown, who wrote to Mrs Lockyer on 26 July 2010 explaining why in his
view the notice of determination should be upheld. In his letter Mr Brown
made it clear that HMRC would wish to argue that there was no qualifying
business at all, as well as that the business (assuming there to be one) was
mainly a business of holding investments.
4. The executors’ appeal was heard by the Tax Chamber of the First-tier Tribunal
(Judge Richard Barlow and Ms Susan Stott FCA, “the FTT”) sitting in Leeds
on 7 and 8 November 2011. The executors had no legal representation, but
were represented by their brother, Mr Nicholas Pawson, who is an actuary.
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