No change of tack for the Upper Tribunal in livery business case

6 December, 2018

CRC v The PRs of The Estate of Maureen Vigne (deceased)

A claim for Business Relief (previously known as Business Property Relief) from inheritance tax has been allowed for a livery business, on the grounds that the business was not mainly holding investments. 


Mrs Vigne died owning 30 acres of land used for her DIY livery business. She lived offsite and provided the following additional services to her patrons:

  • Hay in the winter
  • Manure removal
  • Daily horse health checks
  • Quarterly worming


Business Relief (BR) is not available if a business consists wholly or mainly of investments. If you are just providing land for your customers to use, this will constitute investment activity; if you provide significant additional services, BR could be available.  In this case, HMRC denied BR on the basis that the additional services did not change the nature of the livery business to more than simply providing land.

First-tier Tribunal (FTT)’s judgment

HMRC claimed that the 2013 Pawson case established a presumption that any business involving land is an investment business.

The FTT held that there should be no pre-conception that land based businesses will be wholly or mainly investment.  The correct approach is to apply the ‘objective observer test’: would an objective observer visiting the business would say that the owner was in the business of holding investments?  BR was granted in the basis that Mrs Vigne’s business passed the test.

Upper Tribunal (UT) judgment

HMRC appealed the FTT’s decision, claiming it had made an error when reaching its decision.

The UT upheld the FTT decision and dismissed the appeal.  The FTT had applied the correct test and had been entitled to reach the conclusion it had (although note that the UT was not asked to consider whether it would have reached the same conclusion). 

The UT held that HMRC “overstated” the position when seeking to rely on the ‘Pawson presumption’.  In Pawson the presumption only applies to “owning and holding of land in order to obtain an income from it”, which is more restricted than HMRC’s interpretation.    


The objective observer test clarifies the scope of the Pawson presumption and will no doubt assist tax payers claiming BR in the future.  However, Vigne does not set out the requirements for a land based business to satisfy the objective observer test.  In the UT’s own words, there is still “no clear bright line between businesses which qualify for BR and those that do not.”

The full UT judgment can be found here:

If you have any questions about BR, please contact Francesca Sassoli at or on +44 (0)1892 506 354.