Butler & ors v Commissioners for HMRC [2024] WTLR 23

Analysis

The deceased died on 15 May 2015. At her death she was a member of Tufton Warren Farm LLP. The other member was the trustees of her late husband’s will trust in which she had a life interest, which was treated as part of her estate for IHT purposes under s49(1) Inheritance Tax Act 1984. The LLP owned and ran a wedding venue location. Business property relief was claimed. HMRC issued notices of determination which stated no part of the LLP’s assets was relevant business property for the purposes of s104 Inheritance Tax Act 1984. A statutory review of the determinations led to them being upheld. The executors and trustees of the deceased’s husband’s will trust appealed.

The tribunal reviewed the evidence and the case law:

1. (1) The terms of the agreement with customers to use Clock Barn (including its garden and grounds) was in consideration of a facility fee to make it available to a customer for a specific period of time. The terms of agreement between the customer and the wedding venue finder business were that payments were for hire of the venue only. The business was primarily for holding Clock Barn and the surrounding grounds as an investment.
2. (2) The wedding venue licence and premises licence required the presence of a designated person (or their deputy) who had to meet the local authority registrar on arrival and undertake functions before the wedding ceremony. In this case the role of the personal licence holder was always undertaken by someone in the catering team and never by a member of the LLP staff.
3. (3) Customers were required to contract and pay separately for catering.
4. (4) Under the terms of the premises licence and as a commercial space, Clock Barn had to meet regulatory requirements relating to health and safety. The LLP team initially (and later a third-party catering company, GG) ensured external suppliers had PAT and public insurance certificates, and checks were logged. However, these requirements would fall on any commercial landlord, and were part and parcel of a business of holding investments.
5. (5) Included in the hire were tables and chairs, a cake table, highchairs, garden furniture, tea light holders and some other furnishings. Most of these were required for any event venue. This situation was imperfectly analogous to holiday lets: these typical furnishings had not generally been found to be a major part of a holiday letting business.
6. (6) Included in the hire of Clock Barn were a background music system, a wireless microphone, and a TV with DVD player in the stable room. These were all set up by the LLP’s maintenance team. There was a standby generator which could be used in the event of a power cut. The heating was turned off during speeches and turned back on afterwards. The provision of heating and lighting was a necessary part of the provision of any wedding venue. The provision of the other facilities and services were of less importance, but on balance formed part of a business of holding investments.
7. (7) The kitchen (installed between 2005 and 2008) formed part of the premises hired to the customer. After GG was appointed, it leased and fitted out the Green Barn as a commercial kitchen. The LLP never provided a fully-working kitchen. Rather, it supplied a kitchen which was not fully equipped as part and parcel of the property itself. This fell within a business of holding investments. Critically, after GG was appointed, the LLP no longer provided any kind of kitchen, as the commercial kitchen was provided by the caterers in the Green Barn that they leased. They also fitted out the kitchen space in Clock Barn.
8. (8) The hire of Clock Barn included the use of the dance floor. This did not form part of a business of holding investments.
9. (9) The LLP’s wedding team showed prospective customers around Clock Barn (often more than once) and provided advice on what worked best at Clock Barn for weddings, and helped customers with solving their problems. Showing customers around Clock Barn and organising open days involved considerable work for the LLP, and the evidence was that the compilation of lists of recommended suppliers also involved a lot of work. However, the terms of the wedding venue licence prohibited the LLP team from providing any advice relating to the wedding ceremony itself. Some of the work relating to advice, open days and show-arounds formed part of the marketing of Clock Barn to prospective customers, and so would at least in part be an aspect of finding customers and arranging contracts with them – which would form part of the business of holding investments.
10. (10) The LLP team contacted suppliers booked by their customers before events, to make sure that the supplier was aware of the requirements of the venue, and (where relevant) obtain PAT and insurance certificates. On the day of the wedding, the team would meet the suppliers when they arrived, and supervise their setting up (so that, for example, musicians and DJs did not damage the dance floor). However, following the appointment of GG, much of this work transferred to it and GG passed over to the LLP copies of the PAT and insurance certificates.
11. (11) Before each event, the maintenance team would set up the bare tables and chairs, garden furniture, bunting and the wireless microphone. After the wedding ceremony, the team would reconfigure the furniture for the wedding breakfast and party. The team would then put the furniture away after the event. This activity was not part of a business of holding investments.
12. (12) It would be difficult to classify security as something which is over and above a landlord’s responsibility, especially where a building is open late at night. In many respects the provision of traffic marshalling at the beginning and end of the wedding event had some similarities to the provision of security. The marshalling was undertaken to ensure the safety of everyone arriving and leaving the event, and to ensure that the movement of vehicles was done safely and without conflicts. The provision of traffic marshalling was, at least to some extent, an aspect of a business of holding investments.
13. (13) Ensuring that – prior to an event – Clock Barn and its surroundings were in a clean state, in good repair, and fit to be used for the purpose for which it was hired by a customer, must form part of the business of holding investments. The cleaning of Clock Barn during and after an event was not the sole responsibility of Clock Barn. The caterers would clear up the table settings, plates, cutlery, glasses and catering debris; they were also responsible for cleaning the kitchen and bar. Suppliers would clear their own equipment. Cleaning and supplying the toilets, and clearing ashtrays, by the LLP was not part of a business of holding investments.
14. (14) The garden and grounds provided an attractive setting for a wedding. However, they were not prize-winning. The provision of the garden was an aspect of a business of holding investments.
15. (15) While some level of supervision of a wedding event was undertaken by the LLP through the provision of venue manager, this role was undertaken by GG after it was appointed as caterer.

Held:

The business as a whole had always fallen on the village hall side of the spectrum and away from the fully-serviced conference venue. Although the level of the business activities was more before the appointment of GG, it was a business of holding investments.

At no point did Clock Barn provide amenities and services that went significantly beyond the amenities that were provided in a property held predominantly for investment purposes. The amenities and services that were provided by the LLP were not exceptional in their nature.

After the appointment of GG, the level of non-investment activity undertaken by (or on behalf of) the LLP reduced significantly.

Stepping back and looking at the business as a whole, the wedding venue business of the LLP was predominantly for the purpose of holding its property as an investment.

JUDGMENT TRIBUNAL JUDGE ALEKSANDER: Introduction [1] Helen Butler (‘Mrs Butler’) died on 15 May 2015. At her death, she was a member of Tufton Warren Farm LLP (‘the LLP’). The only other members were the trustees of her late husband’s will trust (called the TR Butler Will Trust – the ‘Will Trust’), in which she …

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