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Posted 8 March 2013
by Gráinne Staunton

A taxing matter

Inheritance Tax Business Property Relief is available for a business or an interest in a business.  It is not available for a business whose main activity is making or holding investments.In the case of Pawson it was decided by the First-tier Tribunal in December 2011 that owning and managing a holiday cottage was a legitimate business qualifying for Business Property Relief.  The Court held that the exploitation of the cottage constituted the operation of a business and that the business was not one which consisted wholly or mainly of holding an investment.

The Revenue appealed and in December 2012 the Upper Tribunal reversed the decision.  The Upper Tribunal found that the work of finding people to rent the cottage, seeing them in and out, cleaning after each letting, changing linen, maintenance and all the other work involved in exploiting a holiday cottage was incidental to the main business of holding the holiday cottage as an investment.  Business Property Relief was denied.

Although the Pawson decision concerned a single cottage, reference was made to earlier decisions concerning holiday caravan sites.  If the decision is not successfully appealed it seems more than likely that the Revenue will seek to extend the scope of the decision to holiday caravan parks.  Maintaining the site, seeing visitors on and off, providing gas and electricity may require more frequent or intensive activity than maintaining a holiday cottage, but the nature of the activities is similar to those in the Pawson case.  If the business of a holiday site is considered to be mainly holding land as an investment, Business Property Relief will be denied and Inheritance Tax will be payable in full on the value of the business.

If you have any questions regarding this blog or want advice regarding how business property relief may help your tax management plans for your park please call Grainne Staunton on 01392 207020 or email


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About the author

Gráinne Staunton

Partner and Solicitor

Partner and solicitor who specialises in the administration of complex estates, Wills and estate planning for wealth preservation and asset protection