Law Report: Farmhouse was not "agricultural land"

Starke v Inland Revenue Commissioners. Court of Appeal (Lord Justice Stuart-Smith, Lord Justice Morritt and Lord justice Ward). 19 May 1995

Farmhouse was not 'agricultural land'

Technical requirements of

affidavit must be observed

Starke v Inland Revenue Commissioners. Court of Appeal (Lord Justice Stuart-Smith, Lord Justice Morritt and Lord Justice Ward). 19 May 1995.

The expression "agricultural land or pasture" in the first part of section 115(2) of the Inheritance Tax Act 1984 did not include buildings or other structures on the land, since they were more specifically included in the latter parts of the definition in that section.

Accordingly, a 2.5 acre site, containing a substantial six-bedroomed farmhouse and an assortment of outbuildings together with several small areas of enclosed land, used as part of a medium-sized farm which carried on mixed farming, did not constitute "agricultural land" so as to be exempt from inheritance tax.

The Court of Appeal dismissed an appeal by the plaintiffs, Colin Barrymore Starke and Peter Michael Barlow (executors of the will of Wilfrid Edward Arnold Brown) against the decision of Mr Justice Blackburne ([1994] STC 295) dismissing their appeal against the commissioners' determination, on 21 May 1993, that Highways Farmhouse, Wiggington Heath, Oxfordshire, which had been transferred on the death of the deceased on 13 May 1988, did not qualify for agricultural property relief from inheritance tax under section 116.

Section 115(2) "agricultural property" was defined as "agricultural land or pasture and included woodland and any building used in connection with the intensive rearing of livestock or fish if the woodland or building is occupied with agricultural land or pasture and the occupation is ancillary to that of the agricultural land or pasture; and also includes such cottages, farm buildings and farmhouses, together with the land occupied with them, as are of a character appropriate to the property."

Gordon Apsion (Hancocks, Oxford) for the executors; Michael Furness (Solicitor, Inland Revenue) for the commissioners.

LORD JUSTICE MORRITT said that the executors originally applied for judicial review of the commissioners' determination. That application was obviously misconceived. By their amended application they sought leave to appeal for an order that the determination was wrong. But in view of the need to demonstrate that the appeal was substantially confined to a question of law, the executors undertook not to contend that the property came within the third part of the section 115(2) as being "such cottages, farm buildings and farmhouses, together with the land occupied with them, as are of a character appropriate to the property". Nor did they contend it within the second part, as being "woodland and any building used in connection with the intensive rearing of livestock or fish". The only question was whether the property fell within the first part, as "agricultural land or pasture". The Interpretation Act 1978 required "land" to be read as including "buildings or other structures" unless the contrary appeared. The contrary must appear, if at all, from other parts of the definition. In that connection, the second part was not of assistance. But the third part referred expressly to the buildings and structures that would be most obviously included in the words "agricultural land" if the Interpretation Act applied in full. Considering the structure of the definition as a whole, with the exception of "woodland" all that followed the words "agricultural land or pasture" was concerned with the buildings of one sort or another which were to be included. In such a context it would be surprising to find that buildings were already included in the phrase "agricultural land or pasture".

Paul Magrath, Barrister

Starke v Inland Revenue Commissioners. Court of Appeal (Lord Justice Stuart-Smith, Lord Justice Morritt and Lord Justice Ward). 19 May 1995.

The expression "agricultural land or pasture" in the first part of section 115(2) of the Inheritance Tax Act 1984 did not include buildings or other structures on the land, since they were more specifically included in the latter parts of the definition in that section.

Accordingly, a 2.5 acre site, containing a substantial six-bedroomed farmhouse and an assortment of outbuildings together with several small areas of enclosed land, used as part of a medium-sized farm which carried on mixed farming, did not constitute "agricultural land" so as to be exempt from inheritance tax.

The Court of Appeal dismissed an appeal by the plaintiffs, Colin Barrymore Starke and Peter Michael Barlow (executors of the will of Wilfrid Edward Arnold Brown) against the decision of Mr Justice Blackburne ([1994] STC 295) dismissing their appeal against the commissioners' determination, on 21 May 1993, that Highways Farmhouse, Wiggington Heath, Oxfordshire, which had been transferred on the death of the deceased on 13 May 1988, did not qualify for agricultural property relief from inheritance tax under section 116.

Section 115(2) "agricultural property" was defined as "agricultural land or pasture and included woodland and any building used in connection with the intensive rearing of livestock or fish if the woodland or building is occupied with agricultural land or pasture and the occupation is ancillary to that of the agricultural land or pasture; and also includes such cottages, farm buildings and farmhouses, together with the land occupied with them, as are of a character appropriate to the property."

Gordon Apsion (Hancocks, Oxford) for the executors; Michael Furness (Solicitor, Inland Revenue) for the commissioners.

LORD JUSTICE MORRITT said that the executors originally applied for judicial review of the commissioners' determination. That application was obviously misconceived. By their amended application they sought leave to appeal for an order that the determination was wrong. But in view of the need to demonstrate that the appeal was substantially confined to a question of law, the executors undertook not to contend that the property came within the third part of the section 115(2) as being "such cottages, farm buildings and farmhouses, together with the land occupied with them, as are of a character appropriate to the property". Nor did they contend it within the second part, as being "woodland and any building used in connection with the intensive rearing of livestock or fish". The only question was whether the property fell within the first part, as "agricultural land or pasture". The Interpretation Act 1978 required "land" to be read as including "buildings or other structures" unless the contrary appeared. The contrary must appear, if at all, from other parts of the definition. In that connection, the second part was not of assistance. But the third part referred expressly to the buildings and structures that would be most obviously included in the words "agricultural land" if the Interpretation Act applied in full. Considering the structure of the definition as a whole, with the exception of "woodland" all that followed the words "agricultural land or pasture" was concerned with the buildings of one sort or another which were to be included. In such a context it would be surprising to find that buildings were already included in the phrase "agricultural land or pasture".

Paul Magrath, Barrister