A kingdom for my horse: Livery businesses qualifying for BPR

As Winston Churchill said; “the outside of a horse is good for the inside of a man” – something that many readers no doubt happily agree with. Over and above the pleasure of riding, owning and maintaining a horse takes time. So, it’s not surprising that with life as busy as it is, many take full advantage of a nearby livery business.

Until recently, the assets of a DIY livery business have been regarded as not qualifying for Business Property Relief (BPR) for inheritance tax purposes. However, the First Tier Tribunal in the case of Vigne means this has now changed -DIY livery business assets do now qualify for BPR.

Horse livery businesses fall into four broad categories

  • Grass livery – the provision of a field on which a horse can graze;
  • DIY livery – where grazing and some stabling for the horse is provided by the business but the horse owner is responsible for the maintenance and well being of the horse;
  • Part livery – where the landowner will take on some of the responsibility for the well being of the horse and will often muck out and provide feed; and
  • Full livery – basically five-star hotel provisions for horses with the livery business taking full care of all the needs of the horse.

Whilst a livery business provides some insignificant activities or expenses of a business nature, HMRC’s view is that the main activity of a livery was holding investments and land – therefore claims for BPR are denied. People are paying for the use of the land for their horses, with the services provided by a DIY livery business coming as part and parcel with that land. Without providing the land (the dominant feature) there would be no livery business.

But for many people who make use of livery facilities, the services the business provides are as important (if not more important) than the provision of the land itself. Looking after horses is a responsible and time-consuming role, and many horse owners simply do not have the time and energy to take on all this involves. In the Vigne case the services provided were more than just providing land in return for money; the horse owner expected and got more for their payments.

This included:

  • Purchasing worming tablets in bulk and passing on the discount to the horse owner. There was also a facility for the staff to administer the tablets to the horses if required;
  • Growing and providing hay to the horses during winter;
  • Poo picking (the removal of manure from the fields) which if left was advantageous to the land but disadvantageous to the health of the horses; and
  • Daily health checks on the horses.

The Tribunal found on the evidence that the business did not consist of mainly or wholly holding investments, but was one which was “offering more than the mere right to occupy a particular parcel of land”.

So, what can we conclude from this?

The main point is that livery businesses and riding schools may qualify for BPR, but whether they do or not will depend on who does what. The more services that the business can provide to the horse owner the better. Services such as worming, provision of feed, poo picking, health checks, providing a safe environment for the horse, on site security, advice to the owner on the care of the horse, blacksmithing services, on call for emergencies and turning out services will all help. As with most things, evidence is key, so make sure there is plenty of it including invoices to horse owners, timesheets as well as marketing literature highlighting services provided and a business plan.

Winston Churchill is also quoted as saying “there is no such thing as a good tax”. That may be so, but it is certainly a good thing to get your livery businesses to qualify for the tax reliefs available.