Ask The Legal Expert: DIY Livery and IHT Relief

This month JCP Associate Solicitor, Beverley Bowen, advises a reader with a DIY Livery business about Business Property Relief.

"I have recently set up a DIY livery business. Will my estate be entitled to any inheritance tax reliefs?"

You are wise to ask – for those who operate within the agricultural and equine industries, tax can be complex. In general, whether relief is available will depend upon the breadth of services you offer.

Business Property Relief (BPR) is available to a trading business. Depending on the business structure, and whether the assets are owned personally by you as the business owner or owned by the business itself, relief is available at either 50 percent or 100 percent.

However, BPR is not available for investment businesses.  Unfortunately, HMRC appear to be taking a more aggressive approach and targeting Do It Yourself livery businesses, arguing that they are nothing more than investment businesses, as a result they would not qualify for BPR.

It is important therefore to consider what services you provide.  It is likely you and your business are responsible for providing water to the horses and hay during winter months.

You will need to buy, store and distribute this hay correctly in accordance with the needs of each horse. Similarly, it is likely that you buy and administer worming products to your charges.

You will also be responsible for the care of the horses, for carrying out daily checks and you will be on call for any emergencies. It is likely that inexperienced owners will also call upon you for advice.

So, as you can see, a DIY livery owner generally has a great degree of work, responsibility and risk.  This would suggest that the business is not purely an investment one and this strengthens your ability to claim BPR successfully.

The guidance I have given here is a general outline. For more detailed specialist advice it is wise to consult a legal professional regarding the specific facts of your case.

For specialist legal advice, call Beverley Bowen at JCP Solicitors Rural Practice Team in Carmarthen on: 01267 266948 or email:  Beverley.bowen@jcpsolicitors.co.uk

For further advice, please contact our specialist Rural Practice solicitors in:

• Swansea: 01792 773773
• Cardiff: 02920 22 5472
• Carmarthen: 01267 234022
• Caerphilly: 02920 860628
• Cowbridge: 01446 771742
• Haverfordwest: 01437 764723
• Fishguard: 01348 873671

The question posed in this blog is based on a hypothetical situation.