188体育

鈥楤耻蝉颈苍别蝉蝉鈥�

Although the word 鈥榖usiness鈥� does not appear in subparagraphs (b) and (bb) of s.105(1), it is considered implicit that a company must have a business to enable its shares to qualify as 鈥榬elevant business property鈥�. The Special Commissioners confirmed in Grimwood-Taylor and Another (executors of Mallender deceased) v IRC [2000] STC(SCD)39 that for shares in a company to qualify for Business Relief the company must carry on a business for gain.

Under s.103(3) 鈥渂usiness鈥�

• includes a business carried on in the exercise of a profession or vocation
• excludes a business carried on otherwise than for gain.

The term 鈥渂usiness鈥� involves a wider concept than trade. The courts have defined it, for example, in the following terms:

• 鈥渋t denotes the carrying on of a serious occupation鈥� - Lord Diplock in TownInvestments v DOE [1977] 1 All ER at page 835.
• 鈥渁nything which occupies the time and attention and labour of a man for the purpose of profit鈥� - Jessel MR in Smith v Anderson [1880] 15 Ch D page 258.
• 鈥渁 serious undertaking earnestly pursued鈥� - Widgery J in Rael Brook v Minister of Housing and Local Government [1967] 1 All ER at page 266.
• 鈥渁ny occupation or function actively pursued with reasonable or recognisable continuity鈥� - Lord Cameron in Commissioners of Customs & Excise v Morrison鈥檚 Academy Boarding Houses Association [1978] STC at page 8.

In relation to rented property, the term was analysed in some detail by Lord Diplock in the Privy Council case of American Leaf Co v Director - General [1979] AC 676 at page 684.

The case was concerned with the definition of 鈥渂usiness鈥� and whether the mere receipt of rental income from property could be considered a business. The Privy Council鈥檚 decision distinguished between the business activity carried on by an individual and that carried on by a company and their lordships stated:

鈥溾€�.in the case of a company incorporated for the purpose of making profits for its shareholders any gainful use to which it puts any of its assets prima facie amounts to the carrying on of a business鈥�.

In the VAT case Commissioners of Customs & Excise -v- Lord Fisher [1981] STC 238 at page 245 Gibson J identified six indicators, some or all of which should be satisfied to identify an activity or activities as a business. These indicators are equally applicable as a test for IHT purposes. He said a business will exist where the activity

• is 鈥渁 serious undertaking earnestly pursued鈥� or 鈥渁 serious occupation, not necessarily confined to commercial or profit-making undertakings鈥�
• is 鈥渁n occupation or function actively pursued with reasonable or recognisable continuity鈥�
• has 鈥渁 certain measure of substance as measured by the quarterly or annual value of . . . supplies made鈥�
• was 鈥渃onducted in a regular manner and on sound and recognised business principles鈥�
• is 鈥減redominantly concerned with the making of 鈥� supplies to consumers for a consideration鈥�

(The above five tests only were applied in the Burkinyoung case) (see this chapter at SVM111160).

• and whether those supplies 鈥渁re of a kind which, subject to differences in detail, are commonly made by those who seek to profit by them鈥�.

Businesses not carried on for gain and unusual businesses

Such businesses are considered to include amongst others:

• some local sports membership clubs
• the management and provision of leisure activities for the benefit of the shareholders and their friends, for example fishing or shooting not run on a genuine commercial basis. Alternatively it may be argued that these are not business activities - see Customs and Excise Commissioners v Lord Fisher [1981] 2 All ER 147.
• some stud farms. Cases should be referred to SAV (Livestock) for advice. Note, however, that land and buildings used for the purposes of any stud farm will constitute agricultural property for agricultural relief purposes in respect of controlling holdings - see chapter 112 of this manual SVM112000.
• residents鈥� associations.

Where a dispute arises as to whether a company does have a business or whether the business is carried on for gain advice should be sought from the Litigation and Technical Advice Team (LTAT).

Woodlands syndicates

You should refer to the LTAT any case where BR is claimed in respect of an interest in a woodlands syndicate or a forestry business run by a company.

Additional Guidance: SVM150000