Golding v HMRC May 2011  

The First-Tier Tax Tribunal recently ruled that a farmhouse is entitled to full agricultural property relief (APR)  from inheritance tax even though the aged occupant only sold a few eggs to a handful of customers.

HMRC accepted the claim for APR on the land and other buildings but they did not accept that the 3 bedroom farmhouse, which was in a poor state of repair, was eligible for the relief.  The deceased had farmed a 16-acre smallholding in Staffordshire since 1965.

HMRC argued that the three-bedroom farmhouse was not eligible for APR because it was not of a “character appropriate” for APR purposes.  A Notice of Determination that the farmhouse did not qualify for APR was subsequently issued by HMRC.

The Tribunal heard that the level of activity on the smallholding had decreased over the years and, in the period leading up to his death, Mr Golding had grown vegetables mainly for his own consumption and sold a few eggs to some 15-20 customers.  Whilst the level of profits was below the National Minimum Wage, it was concluded that the deceased was still working his holding, as a farm, when he died.

On the main issue of whether the farmhouse was or was not of a “character appropriate” for APR the Tribunal concluded that on the basis of the historical facts of the holding, the type of property, as well as the taxpayers’ intentions and actions, the house should qualify for APR.

The Tribunal also stated that it would be unreasonable to expect the activities of an 80-year old to be extensive in nature. It was also clear from the taxpayer’s actions that he intended to carry on farming. This was shown by the purchase of new equipment by Mr Golding shortly before his death.

HMRC have until mid-July to appeal this decision.

The UK Government has announced that it will amend the Scotland Bill to give the Scottish Parliament increased financial powers.

This u-turn by the UK Government will allow the Scottish Parliament to issue bonds to access cash from the capital markets.

The press release issued by the Scotland Office is available here.

HM Treasury has now published its consultation document on the new 36 per cent rate of inheritance tax where at least one-tenth of an estate is left to charity.

The consultation closes on 31 August.  The legislation is not likely to come into effect until the 2012-13 tax year.

The consultation paper is available here.

The Sunday Herald reported yeserday that Erskine’s Edinburgh care home had received a critical report from Social Care and Social Work Improvement Scotland (SCSWIS).  It was also reported that the Chief Executive Officer of Erskine, Major Jim Panton has resigned.   A spokesman for the care home stated that the resignation was not connected to the critical report.

The inspection report found prescription drugs had not been administered properly, and fluid and food intakes had not been recorded.

The article is available here.

Visitors to Parisian cemeteries will soon be greeted by touchscreens helping them to find the graves or tombs of relatives and notable residents.   Given the increase in burial charges at a number of Scottish Councils over the last few months it would be nice to see our Councils coming forward with their own forward thinking proposals.

The Scottish Government yesterday announced proposals to limit increases in the taxation of North Sea oil and gas.   

The proposal is in response to the recent changes to the taxation of North Sea oil and gas announced by UK Chancellor George Osborne in his recent Budget.  George Osborne raised the “supplementary tax” on North Sea oil production from 20% to 32%.  This is expected to raise £2bn and is to be used to fund a cut in fuel duty.

The trade body Oil and Gas UK said it could cost the industry £50bn over 10 years.

Scotland’s First Minister, Alex Salmond said companies should be allowed a minimum rate of return, before the tax is levied.   Iain Gray, leader of the Labour group of MSPs, endorsed the proposed reforms.

This order brings the Bribery Act 2010 into force on 1 July 2011.

In addition to prohibiting the offering and receiving of bribes and the bribing of foreign public officials, the Act creates a new offence which can be committed by commercial organisations which fail to prevent persons associated with them from bribing another person on their behalf.

The Ministry of Justice’s guidance on bribery prevention procedures for commercial organisations is available here.

The European Parliament has voted by a large majority in favour of  an optional European contract law (see our earlier post here).

The European Commission’s press release welcoming the vote is available here.

The Law Society has arranged for a temporary relaxation of the 14 day limit on the period specified in the “classic” Letter of Obligation.  The time limit  will be raised to 21 days for all transactions which settle during the period from Friday 24 June to Friday 1 July inclusive.

The relaxation is necessary as a result of  changes being made to HMRC’s computer system which mean that the system will not accept SDLT returns submitted online or by paper from Saturday 25 June (at 00:01) until Monday 4 July (at 00:01).

The Law Society’s press release is available here