HM Revenue & Customs have recently taken another case before the courts in an attempt to deny Agricultural Property Relief on the farmhouse, and have lost their argument.
The case in question involved a 16.29 acre smallholding in Staffordshire (acknowledged as the “Golding case”. The farmer had originally kept livestock on the holding, but as he grew older the farming activities reduced. However, the farmer continued to produce a small profit each year as he still grew and sold fruit and vegetables, kept 70 or so hens to sell their eggs, and produced hay for sale.
HM Revenue & Customs reluctantly agreed that the house (which was in poor condition) was a farmhouse, but chose to argue that it was not of character appropriate to the land, and that its value should be liable to inheritance tax. They argued this by suggesting that the holding was not a viable economic unit, and that the farming activities did not require the use of a house. They also argued that after his death the house was unlikely to be used again as a farmhouse, so no relief should be due.