The Commissioners for HM Revenue and Customs v Andrew Michael Brander (as Executor of the Will of the late fourth Earl of Balfour)

JurisdictionUK Non-devolved
JudgeLord Hodge,Judge Oliver
Neutral Citation[2010] UKUT 300 (TCC)
CourtUpper Tribunal (Tax and Chancery Chamber)
Subject MatterTax,16 August 2010
Date16 August 2010
Published date01 December 2016
[2010] UKUT 300 (TCC)
Appeal number
FT
C/
33/2009
Inheritance tax
Exempt transfers and relief
Business property relief
Replacement property
Deceased having liferent interest in family estate
Deceased declared to be fee simple proprietor of the estate
Deceased
entering into partnership with intended successor
Whether deceased s
interest in partnership, which subsisted immediately before his death,
replaced previous business carried
on
by deceased
Whether business
excluded from business property relief as consisting mainly of making or
holding investments
Inheritance Tax 1984, ss 105(1), (3), 107.
IN THE
UPPER
TRIBUNAL
TAX
AND CHANCERY
CHAMBER
Before:
LORD HODGE and
SIR STEPHEN OLIVER QC
(Judges of the Upper Tribunal)
Between
THE COMMISSIONERS FOR HER MAJESTY S
REVENUE AND CUSTOMS
Appellant
s
-
and
-
ANDREW MICHAEL BRANDER
(as Executor of the Will of the late fourth Earl of Balfour)
Respondents
Roderick N Thomson QC (instructed by General Counsel and Solicitor to HM
Revenue
and Customs) for the Appellants
Julian Ghosh QC and Elizabeth Wilson, counsel, instructed by Turcan Connell,
Solicitors for the Executor
Hearing dates
: 5, 6 and 7 May 2010
© CROWN COPYRIGHT 2010
[2010] UKUT 300 (TCC)
2
DECISION
1. This is an appeal by the Commissioners of H M Revenue and Customs
( HMRC ) from the decision of Judge J. Gordon Reid QC dated 14 May 2009,
[2009]
UKFTT 101 (TC) and [2009] SFTD, in which he allowed the appeal by Mr Brander 5 as Lord Balfour s executor ( the executor ) against a notice of determination denying
inheritance tax business property relief ( BPR ) in respect of the late Lord Balfour s
interest
in the
Whittingehame
Farming Company ( WFC ) in relation to assets of
the
Whittingehame
estate, namely land, houses and cottages, which were let to third
parties.
10
2. Lord Balfour died on 27 June 2003. On his father s death in 1968 he inherited a
life
rent
interest in
Whittingehame
Estate, East Lothian. The trust estate comprised the
landed estate, which we describe below, and certain moveable property which is
described in the joint statement of agreed facts. In November 2002 the heritable
15
estate was released from the liferent in the court process which we describe in
paragraph [14] below. This appeal is principally concerned with (i) the c
orrect
analysis
of Lord Balfour s interest in the heritable properties in the trust estate while a
liferenter, (ii) the way in which the estate was run before 2002 and (iii) the nature of
the business or businesses conducted on that landed estate both befo
re and after 2002.
20
The scope of the appeal
3. This is appeal on a point of law only: section 11(1) of the Tribunals, Courts and
25
Enforcement Act 2007 ( the 2007, Act ). HMRC applied for permission to appeal
under section 11(3) of the 2007 Act on a wide range of grounds initially to the First-
tier Tribunal and thereafter to the Upper Tribunal. By decision notice dated 10
November 2009 the Upper Tribunal granted permission to appeal on certain grounds
but refused permission to appeal on other grounds on the basis that those grounds did
30
not have a real prospect of success.
4.
As HMRC alleged that the First
-
tier Tribunal had erred in law in failing to make
certain findings in fact in relation to matters which HMRC asserted were uncontested,
the Upper Tribunal, in order to ensure that HMRC could properly argue their case,
35
invited them to produce a statement of proposed facts. Thereafter the Upper Tribunal
added a further question to those which the First-tier Tribunal had formulated, asking
whether the First-tier Tribunal had erred in law in failing to make the findings of fact
which HMRC sought. We emphasise that that question also is a point of law.
40
The relevant provisions of the Inheritance Tax Act 1984
5. Chapter 1 of Part V of the Inheritance Tax Act ( IHTA 1984 ) deals with BPR.
The business must be a business carried on for gain: s.103(3). Business property
which falls under s.105(1)(a), (b) or (bb) attracts 100% relief: s.104.
45
6.
Section 105 provides (so far as relevant):

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