Steep rise in number of investigations into agricultural property relief claims

The number of investigations that HMRC has opened into claims for agricultural property relief has increased by 28% in the year ended 31 March 2022 jumping from 217 investigations to 278 according to Boodle Hatfield.

HMRC will investigate claims for the relief when it suspects land is not being farmed commercially. This may be because the claimant lives in the farmhouse but plays no part in farming the land this being someone else entirely who lives offsite. In this instance the farmland may still be eligible but the farmhouse will be liable for inheritance tax.

Another cause could be that the size and value of the farmhouse is not commensurate to the size and value of the farmland. This may be the result of extending the farmhouse or previous sales of farmland reducing the total acreage.

If the farm’s outbuildings are...