Office servicing business is not a trade

The deceased owned shares in F Ltd which had a wholly-owned subsidiary N Ltd which owned a six-floor office building in London. Some of the floors were let commercially but others were operated as serviced offices managed by the company through an agent.

The executors claimed business property relief (BPR) on the basis that the serviced office business was a trade. HMRC refused saying the business consisted mainly of holding investments. Therefore the condition in IHTA 1984 s 105(4)(b) was not met.

The taxpayers appealed.

The First-tier Tribunal took as a starting point that the owning and holding of land to obtain an income from it was generally to be characterised as an investment activity. It was then necessary to look at the activities of the business in the round.

It found that most of the activities of the business – through its...