Relief is due

The deceased the fourth earl of Balfour inherited a lifetime interest over a Scottish estate in 1968. He applied in 2002 to end his liferent and obtained a declaration that he was the fee simple proprietor of the estate.

He then entered into a partnership with his nephew and heir. In 2003 the earl died.

HMRC refused business property relief in respect of the partnership on the basis that the deceased’s interest in the partnership was not relevant business property within IHTA 1984 s 105(1)(a).

Relief was not therefore due under s 104 because the activities carried on at the estate were the making or holding of investments.

Alternatively the deceased had not managed the estate management and farming activities as his single composite business immediately before the partnership was formed and...