Stratford-upon-Avon law firm Lodders has welcomed a Midlands farming victory over the tax authorities.

The case concerned the late Dennis Golding, from Staffordshire, and a dispute over whether his farmhouse should qualify for Agricultural Property Relief (APR).

Louise Igoe, a Partner in the Private Client Department at Lodders Solicitors, said the decision of the First-tier Tax Tribunal (FTT), in the case of Golding v Her Majesty's Revenue and Customs (HMRC), was an important judgement for all agricultural holdings, particularly small ones.

The executors had claimed APR on the 16-acre smallholding which included a three bedroom house near Lichfield seeking to reduce the inheritance tax payable on the estate. Mr Golding was 80 and although his faming activities had understandably declined, he continued to grow vegetables (mainly for his own consumption) and sold a few eggs up until his death.

HMRC accepted the claim for APR on the land and buildings but they did not agree that the house, which was in a poor state of repair, was eligible . However, the FTT found in favour of the taxpayers and held that the house was eligible for relief.

Mrs Igoe said: "Obtaining APR on farmhouses can be difficult and it is very rare these days to have a claim accepted without any investigation.

"In this case, HMRC's main argument was that the farming business did not require a farmhouse because Mr Golding's faming activities had declined during the latter years of his life. HMRC also referred to Mr Golding's lack of substantial profit as evidence that there was no farming business. If HMRC had been successful, the availability of APR to farmhouses could have been significantly limited.

"The decision reinforces that cases should be looked at 'in the round'. In other words, a wide range of factors should be taken into account when assessing whether or not the farmhouse is considered to be of a 'character appropriate' for APR purposes. These factors include looking at the size of the holding and the history of the holding.

"Importantly, the FTT recognised that an elderly farmer may still be a farmer even if they are not as active as they once were, at the date of their death. Mr Golding had purchased new equipment before he died and this was evidence of his intention to carry on with his farming activities.

"HMRC has until mid-July to challenge the decision and this may not be the end of this matter. However, it does highlight the importance of obtaining professional advice where agricultural property is involved."

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