The number of investigations that HMRC has opened into claims for agricultural property relief has increased by 28% in the last year, jumping from 217 investigations to 278 in the last 12 months, according to law firm Boodle Hatfield.
HMRC may reject a claim for agricultural property relief for a number of reasons, including:
the claimant lives in the farmhouse, but plays no part in farming the land, this being someone else entirely who lives offsite, meaning the farmland may still be eligible, but the farmhouse will be liable for IHT;
the size and value of the farmhouse is not commensurate to the size and value of the farmland;
the farm’s ‘outbuildings’ are located some distance away, suggesting that the outbuildings are not used for agricultural purposes;
farmworkers' cottages are being used for holiday lets, rather than agricultural purposes;
and the land has been used for ‘rewilding projects’, which are not eligible for APR, e.g. trees or wild meadows.
After a farmer retires, there is also a risk that HMRC may no longer consider the farmland as being used for agricultural purposes.
The number of investigations that HMRC has opened into claims for agricultural property relief has increased by 28% in the last year, jumping from 217 investigations to 278 in the last 12 months, according to law firm Boodle Hatfield.
HMRC may reject a claim for agricultural property relief for a number of reasons, including:
the claimant lives in the farmhouse, but plays no part in farming the land, this being someone else entirely who lives offsite, meaning the farmland may still be eligible, but the farmhouse will be liable for IHT;
the size and value of the farmhouse is not commensurate to the size and value of the farmland;
the farm’s ‘outbuildings’ are located some distance away, suggesting that the outbuildings are not used for agricultural purposes;
farmworkers' cottages are being used for holiday lets, rather than agricultural purposes;
and the land has been used for ‘rewilding projects’, which are not eligible for APR, e.g. trees or wild meadows.
After a farmer retires, there is also a risk that HMRC may no longer consider the farmland as being used for agricultural purposes.
