Agricultural Land
NewsA recent case in Northern Ireland has highlighted the continuing potential for the Inland Revenue to challenge the inheritance tax treatment of conacre lettings (ie farmland which is let out from year to year).
In the recent Northern Ireland Court of Appeal case of McCall and Keenan (Personal Representatives of McClean) -v- HM Commissioners of Revenue and Customs, on 25th February 2009, it was decided that business property relief could not be claimed in relation to conacre lettings.
The facts in that case related to 33 acres of agricultural land at Ballyclare, County Antrim, which had been let out in conacre for a number of years for grazing. At the date of Mrs McClean’s death, the land was assessed as having a development value of ?5,800,000 (it was zoned for development), which far exceeded its purely agricultural value of ?165,000.
The case therefore is not in relation to agricultural property relief, but in relation to business property relief on the excess over ?165,000, which was decided not to be available. This is because letting in conacre was treated as an activity of making or holding investments (which does not qualify for business property relief).
However it does raise concerns for landowners whose land is let out in conacre, if in addition to its agricultural value it has a higher development value, as to being assessed for inheritance tax on the higher value.
In all areas of inheritance tax, with increasing pressure on government budgets in coming years you should regularly review your Wills and inheritance planning, and our private client team will be happy to assist in that process.
Craig Russell