Shropshire Star

Landmark livery victory could herald tax savings

A livery yard which offered DIY plus other services has recently won a landmark case against the Inland Revenue, qualifying for Business Property Relief, which could hold well with other land-based activities.

Published
Susie King MRICS is a partner within Balfours

However the victory comes with three caveats: The importance of running a professional livery yard, the cost of going commercial against the potential gain from BPR and the government’s intention to appeal against the decision.

Previously the Inland Revenue only applied BPR to full livery yards and did not permit DIY businesses, perceiving this as renting out land and stables classified as an investment asset rather than a key business asset.

The case involved the estate of a deceased Maureen Vigne, who ran a livery business. It was argued on appeal that in addition to pasture and stabling, the yard provided feed, wormers and checked the horses. The judge said rather than in assessing the value of the land’s occupation, the owner’s intentions should be taken into account.

Mrs Vigne had planning permission for additional stables and had previously applied for permission for accommodation for the yard manager – who was qualified to British Horse Society stage four.

As a result the judge ruled that, combined with the services provided, this qualified as a non-investment business that was more than simply letting land.

If this result stands it could mean significant savings for those inheriting DIY businesses, with BPR at 50 per cent or 100 per cent. Therefore anyone running a serious livery stables should ensure that it is managed in a professional manner, which may also mean ensuring some staff or personnel have appropriate qualifications and by adding some additional services, to demonstrate that it is a true trading business.

Conversely, many DIY initial start-ups are relaxed and informal often evolving as a diversification or sideline to support the owners' own equestrian habits.

Going to the next level to potentially qualify for BPR is going to incur additional costs and complications in terms of facilities, staff, insurance, planning permission, taxation, business rates and so on - which will only be viable on enterprises with the necessary scale or critical mass.

Susie King MRICS is a partner within Balfours