2 February 1996

Heirs free of tax burden

TENANT and landlord organisations have welcomed a Court of Appeal decision, which releases the burden of a penalising tax on their heirs.

The court ruled against the Inland Revenues appeal, which sought to establish the principle that landlords and tenants should always try to get rid of an existing tenancy to achieve vacant possession value. This would have resulted in significant inheritance tax burdens being placed on heirs.

The proposal was contested by the Country Landowners Association when it took up the case on behalf of the heirs of a deceased Northumbrian hill farmer, Mr Walton, nine years ago. The ruling has established that only in exceptional circumstances would both landlord and tenant act like speculators and get rid of a tenancy to enhance land values.

Adrian Baird, CLA chief taxation adviser, said the ruling was a victory for common sense. "It should dispel the fantasy myth of the Revenue that there will always be collusion between a deceased tenants heirs and the landlord."

John Rennie, Tenant Farmers Association director general, said most landlords and tenants saw their agreements as long-term, and not be disturbed for short-term gains. &#42