Last year’s BR report looked at two cases where HMRC contested the availability of BR. In the first case HMRC successfully defeated a claim for BR at the tax tribunal (Ross v HMRC) whilst, in the other, the taxpayer was successful (Vigne v HMRC).

Since then, HMRC has appealed the Vigne decision and there has been another important BR case decided by the tax tribunal.

First a recap. For a BR claim to succeed, a business must be wholly or mainly trading. In the world of property, there exists a spectrum of business types, ranging from a fully serviced hotel at one end (which would without question be trading) to long-term property lets with a passive landlord at the other (which would be treated as an investment). Cases therefore often turn on where exactly a particular business falls on that spectrum. The trend in recent years has been for HMRC and the tribunal to require a very high level of additional services over and above simple property letting in order to qualify for BR. It was against that background that the successful BR claim in Vigne last year came as a pleasant (for taxpayers at least) surprise.

It was therefore not surprising when in HMRC v Vigne, HMRC appealed against the first decision that the Vigne family horse livery business was trading. HMRC argued that it was mainly an investment business. However, for technical reasons, HMRC were only able to appeal on narrow grounds and they lost the appeal. Interestingly, the appeal tribunal hinted that they were not sure that the original decision was the correct one, but it allowed the appeal nonetheless based on the limited grounds for appeal that it could consider.

The second case (Graham v HMRC) saw another taxpayer successfully securing BR, but on a very different type of business. This business involved a holiday complex on the Isles of Scilly. There were four flats or cottages, together with a couple of guest bedrooms, and critically, there was a long list of additional services that went well beyond those provided in a simple property let. They included a swimming pool, sauna, BBQ, games area, a laundry, a golf buggy available for hire, a welcome pack, an exceptional garden, and extensive help and guidance from the owners to assist people through their stays.

Because of the exceptionally high level of services offered, the judge concluded that the additional services predominated over the basic letting activity and, as a result, concluded that the business fell just on the right side of the line to qualify as trading for BR.

Both Vigne and Graham are unusual in different ways. In Vigne, the case was argued by the deceased’s son, without professional representation in the court. As a result, it is possible that the tribunal was more sympathetic to the case than it might otherwise have been. In Graham, the level of services offered was exceptional, and therefore, unusual but the fact the case was won by the taxpayer confirms that BR for businesses of this sort remains a possibility.

This piece has been written by Tom Hewitt, Partner at Burges Salmon LLP as part of the Business Relief Report 2019. For the full report go to

Comments are closed.