Weston v Commissioners of Inland Revenue

JurisdictionEngland & Wales
Judgment Date17 November 2000
Date17 November 2000
CourtChancery Division

Chancery Division.

Collins J.

Weston (as Executor of the Will of Weston Deceased)
and
Inland Revenue Commissioners

Robert Argles (instructed by Vincent French) for the appellants.

Christopher Tidmarsh (instructed by the Solicitors for the Commissioners of Inland Revenue) for the Crown.

The following cases were referred to in the judgment:

Casey v Monteagle Estates Co IR[1962] IR 106

Cook (HMIT) v Medway Housing Society Ltd TAX[1997] BTC 63

Edwards (HMIT) v Bairstow & Harrison TAX(1956) 36 TC 207

Evans Medical Supplies Ltd v Moriarty (HMIT) TAXWLR(1957) 37 TC 540; [1958] 1 WLR 66

Farmer (exors of Farmer dec'd) v IR Commrs SCD(1999) Sp C 216

Furness v IR Commrs SCD(1999) Sp C 202

Hall (exors of Hall dec'd) v IR Commrs SCD(1997) Sp C 114

IR Commrs v Buxton Palace Hotel Ltd TAX(1948) 29 TC 329

IR Commrs v Desoutter Bros Ltd TAX(1945) 29 TC 155

IR Commrs v Tootal Broadhurst Lee Co Ltd TAX(1949) 29 TC 352

Powell & Anor (exors of Pearce dec'd) v IR Commrs SCD(1997) Sp C 120

Inheritance tax - Practice and procedure - Business property relief - Whether company carrying on business of running caravan park was carrying on business consisting wholly or mainly in making or holding of investments - Whether new point could be raised by appellant which had not been raised before special commissioners - Inheritance Tax Act 1984,Inheritance Tax Act 1984 section 105 subsec-or-para (3)s. 105(3).

Facts

The deceased's estate included shares in a company whose business comprised the purchase and sale of caravans, the sale of caravans for commission on behalf of owners, granting rights to a caravan pitch for a "pitch fee", the maintenance and administration of the caravan park and the provision of facilities and amenities such as electricity to the caravan owners. Up to 75 per cent of the employees' time was spent on maintenance and 25 per cent on sales. Before the special commissioners the appellant argued unsuccessfully that the receipt of pitch fees was ancillary to caravan sales. He appealed to the High Court where he sought to raise a new point.

Issues

(1) The availability of business property relief for inheritance tax purposes; and in particular, whether the company's business consisted wholly or mainly in making or holding investments.

(2) When a new point could be raised before the High Court.

Held, dismissing the appeal:

1. The question whether assets were held as investments and whether the business consisted wholly or mainly in the holding of investments, was a question of fact to be determined by the special commissioner. In this case the special commissioner's decision could not be faulted. He applied the correct legal test and took into account only relevant matters.

2. A new point could only be raised if it was on a point of law which no evidence could alter. The appellant's new point could not be raised because new evidential issues would have to be explored and there was no reason why that evidence could not have been adduced below (even if he then reserved the point for the High Court).

JUDGMENT

Collins J: I. Introduction

1. Mrs Doreen Weston died in December 1993. Her estate included 1801 shares in Fowley Mead Park Ltd ("the company"), which ran a caravan site in Hertfordshire near the M25. This appeal is by her son, Mr Johnny Weston, from a decision of the special commissioner deciding that relief from inheritance tax in respect of "relevant business property" was not available in respect of the shares, because the business carried on by the company consisted mainly in "making or holding investments" for the purposes of the Inheritance Tax Act 1984, Inheritance Tax Act 1984 section 105 subsec-or-para (3)s. 105(3). This is an appeal on questions of law only, and the question for the court is whether the special commissioner erred in law, or whether Mr Weston can satisfy the Edwards (HMIT) v Bairstow & Harrison TAX(1956) 36 TC 207 ("Edwards") standard that there was no evidence to support his conclusion or that the only true and reasonable conclusion contradicts the determination, and also whether Mr Weston can pursue an argument not raised before the special commissioner.

2. The Capital Taxes Office determined that the holding of shares in the company was not relevant business property for the purposes ofInheritance Tax Act 1984 section 104 subsec-or-para (1)s. 104(1) of the Inheritance Tax Act 1984. The combined effect of Inheritance Tax Act 1984 section 104 section 105ss. 104 and 105 of the Inheritance Tax Act 1984 is that where the whole or part of property deemed to be transferred on death is attributable to the value of property consisting of a business or interest in a business the whole of that part of the business transferred shall be treated as reduced by 100 per cent, but:

a business or interest in a business or shares in or securities of a company, are not relevant business property if the business, or, as the case may be, the business carried on by the company consists wholly or mainly of one or more of the following: that is to say … making or holding investments (Inheritance Tax Act 1984 section 105 subsec-or-para (3)s. 105(3)).

3. The activities of the company consisted of or included the following:

  1. (a) the purchase and sale of caravans;

  2. (b) the sale of caravans for commission on behalf of the owners;

  3. (c) the grant of the right to pitch caravans on the caravan pitches of the Fowley Mead Caravan Park ("the Park") in return for "pitch fees";

  4. (d) the maintenance of and administration of the Park and the provision and maintenance of the facilities relating thereto;

  5. (e) the supply of the electricity and some bottled gas (used by the pitch holders at the Park).

II. The decision

4. The facts found by the special commissioner are as follows:

  1. (2) The Park is situated a short distance to the north of the M25 Motorway at Waltham Cross, Hertfordshire. The Park is entirely residential. It does not accommodate touring caravans or caravan rallies. From the photographs and the video cassette provided the impression was given that the Park forms a suburban residential development in miniature. The caravans do not have the appearance of touring caravans: they give the appearance of small neat bungalows having tiled roofs. Although they have wheels, those wheels are concealed.

  2. (3) Each caravan has a small garden and the Park is plentifully supplied with attractive shrubs.

  3. (4) Each caravan is supplied with mains water, mains drainage and mains electricity. There is no mains gas supply but some caravan owners use bottled gas, purchased from the company. Some caravan owners have installed telephones.

  4. (5) The caravans are owned by their occupiers who pay a rental known as a pitch fee to the company for the...

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