HMRC is trying to reclassify a trading business as an investment business in order to collect more inheritance tax (IHT) as shown in recent tax tribunal cases, for example, Pawson [2013] UKUT 050 (TCC), McCall [2009] NICA 12 and Zetland TC 02690, where in each case the taxpayer lost. If HMRC can prove that a business is an investment business as opposed to a trading business, then it can deny the eligibility to business property relief (BPR) and collect more IHT. It is now official that HMRC is looking closely at all claims for BPR and agricultural property relief (APR). The HMRC approach appears to have been to consider a business in the context of the 'investment line' with regard to land-based businesses as opposed to looking at a business in the context of the 'badges of trade' and 'the thoughts of an intelligent businessman'.
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