9th Dec 2019

In an interview with Lexis Nexis, Christopher McNall discusses his recent important Agricultural Property case against HMRC and the practical implications arising.

This article was first published on Lexis®PSL Private Client on 19 November 2019.

Private Client analysis: Allowing an appeal on the availability of Agricultural Property Relief (APR) and Business Property Relief (BPR) from inheritance tax, the Tax Chamber considered fundamental issues about APR, including when a farmhouse ceases to be a farmhouse, and the nature of agriculture. Christopher McNall, a barrister at 18 St John Street Chambers, Manchester, discusses the tribunal’s decision.

Charnley and another (as executors of the estate of Thomas Gill (deceased)) v Revenue and Customs Commissioners [2019] UKFTT 650 (TC)

What are the practical implications of this case?

This is a case with significant practical implications.

Agricultural Property Relief (APR) against Inheritance Tax is a 100%, ‘all-or-nothing’, relief. As such, the question of whether APR is available is of great financial importance wherever farmland, farmhouses, or other agricultural buildings are concerned.

Although an analysis of whether APR applies often arises after the taxpayer’s death—i.e. during administration of the estate—the issue does not only concern executors and personal representatives. The potential availability of APR on a death cannot safely be left to be considered only when the taxpayer dies. It must also be considered and regularly reviewed by lawyers, tax advisers and other advisers during the taxpayer’s lifetime, because the taxpayer’s circumstances may change and the qualifying criteria for APR may cease to apply or become unclear.

Issues about the farmhouse can be of particular importance because the farmhouse—especially on a farm of modest acreage—may make up most of the value of the estate.

The decision in Charnley is important because it deals with whether APR is available in one commonly encountered situation: namely where the ageing or infirm farmer, who has come to do less and less ‘hands-on’ farming over the years, instead lets others use his or her farmland.

If this happens, does the farmhouse (APR available) cease to be a farmhouse, ‘occupied for the purposes of agriculture’, and just become a house (no APR)?

The precise dividing line can be hard to pin down, and Charnley demonstrates the thought that the legal team have to put into the marshalling of the evidence in support of the initial claim (and, if APR continues to be refused by HMRC, an appeal to the tribunal). That is because the prospects of any claim or appeal can often be significantly improved by careful identification of the factual issues which the tribunal is likely to want to consider. This is especially true when the tribunal—not necessarily composed of farming experts—is considering a specialist industry such as agriculture.

What was the background?

Tom Gill died in 2013, aged 79. He lived at Woodlands Farm, which was made up a solid but run-down farmhouse, some outbuildings, and about 20 acres of pasture land. Over the years, and as he got older, Mr Gill did less ‘hands-on’ farming himself. In the mid-1990s, he began putting out the pastureland on grazing licences and that continued until his death. Eventually, he got rid of all his own cattle and stopped growing crops such as potatoes (although he kept his large collection of tractors and other farm machinery).

His executors made a claim for APR of about £1.1m (a good illustration of the value of even a modest farm) as well as a £20,000 claim for BPR on his farm machinery.

But the claim to APR in relation to the farmhouse and the outbuildings was refused by HMRC on the basis that, in the circumstances, the farmhouse was no longer a farmhouse, and so was not ‘agricultural property’ within the meaning under section 115 of the Inheritance Tax Act 1984 (IHTA 1984).

HMRC’s view was that the farmhouse was not occupied by Mr Gill ‘for the purposes of agriculture’, in the sense that there was no longer an objective or functional connection between Mr Gill’s occupation of the farmhouse, and the activities actually being undertaken on the land.

HMRC also sought to argue that the things which Mr Gill was doing, such as the growing of grass, was not farming anyway and hence not agriculture. HMRC’s view was that the land was really being held by Mr Gill wholly or mainly as an investment.

What did the tribunal decide?

The tribunal allowed the appeals, and allowed the executors’ claims for APR and BPR. The tribunal considered and applied the guidance given in other cases such as Atkinson v HMRC [2010] UKFTT 108 (TC) (a farmer going into long-term residential care) and Golding v HMRC [2011] UKFTT 351 (TC), [2012] STC 289, [2011] All ER (D) 246 (Oct) (a farm of modest acreage with commercial activity limited to selling eggs at the farm gate).

The tribunal agreed with the appellants that the expression ‘for the purposes of agriculture’ in the IHTA 1984, s 117 is wide, and does not have any special or restricted meaning, but simply reflects the wide range of activities that can constitute agriculture.

The tribunal (at para [99]) identified that ‘the issue is whether there was a functional nexus between Mr Gill’s occupation of the house and the agricultural activities carried out’.

The tribunal remarked (at para [100]) that ‘there could be no doubt that, certainly historically, Mr Gill’s occupation of the farmhouse and activities on the farm would satisfy the requirements of the legislation in that the occupation was for agricultural purposes such that the farmhouse would constitute agricultural property. The question is whether the activities of Mr Gill changed sufficiently and to the extent that he could no longer be said to be farming the land during the relevant period’.

The tribunal found that, although Mr Gill had stopped rearing livestock, this did not alter the true nature of his work. On the evidence, his activities—such as fencing, drainage, ditching, harrowing, reseeding the grass from time to time, checking on livestock, and helping when animals were moved—were still those of a farmer, working an active farm.

The tribunal agreed with the appellants that ‘maintenance and keeping the land in good order are part and parcel of running a working farm; an integral part of farming is maintaining the productivity of land and cultivation falling within the scope of “agricultural activities”.’

As such, the farmhouse was still a farmhouse, and the farm buildings were still farm buildings.

The tribunal also considered the guidance given in cases such as Executors of Grace Graham v HMRC [2018] UKFTT 0306 (TC) concerning the circumstances in which it can be said that land is being held ‘wholly or mainly as an investment’, and so BPR was allowed in relation to the farm machinery.

Case details

  • Tribunal: First-tier Tribunal (Tax Chamber)
  • Judges: Judge Jennifer Dean and Mr David Moore
  • Date of decision: 15 July 2019

Christopher McNall practices in courts and tribunals across England and Wales, specialising in disputes concerning agricultural land, all aspects of tenancies under the Agricultural Holdings Act 1986, and proprietary estoppel and Inheritance Act disputes concerning farms. He is the editor of the ‘Agricultural Land’ section of Halsbury’s Laws of England (2018), and author of A Practical Guide to Agricultural Tenancies (2019). He is chairperson of the Agricultural Land Tribunal for Wales, and a fee-paid judge of the Tax and Property Chambers of the First-tier Tribunal. In Charnley, he represented the appellant executors (instructed by Barry Dearing at Steele & Son, Clitheroe).


This article was first published on Lexis®PSL Private Client on 19 November 2019.   Interviewed by Kate Beaumont.

Christopher McNall specialises in disputes about tenanted and freehold farms and land (and especially agricultural tenancies under the Agricultural Holdings Act 1986), taxation (especially of agricultural land), proprietary estoppel, and inheritance.

He has appeared in many leading agricultural and tax cases in the Court of Appeal, the High Court, the Agricultural Lands Tribunal, and the First-tier Tribunal. He is Chairperson of the Agricultural Lands Tribunal for Wales, a Deputy District Judge, and a fee-paid Judge of the Tax and Property Chambers of the First-tier Tribunal.

Christopher was Consultant Editor for the ‘Agricultural Holdings and Allotments’ title in the 2018 edition of Halsbury’s Laws of England and writes the ‘View from the Bar’ column for the Agricultural and Rural Affairs section of Practical Law. His book, ‘A Practical Guide to Agricultural Law and Tenancies’, is available to buy on Amazon.

For more information on Christopher McNall please contact a member of our Business and Property Clerking Team on 0161 278 8261 or email