The test of occupation is factual.
By an extra-statutory concession dated 13 February 1995, the condition in ss.117 and ss.169 concerning occupation for agricultural purposes is often regarded as satisfied by cottages occupied by retired farm workers or their surviving spouses if either:-
However, occupation at a market rent by someone not otherwise working on the farm is not occupation by the farming company. For further information see Chapter 24 of the Inheritance Tax manual at IHTM24045
A company is treated as having occupied property held at the time of transfer for any period when it was previously occupied by a person ‘'who subsequently controls the company’. The usual situation will be when a transferor incorporates a previously unincorporated farming business and transfers the farming assets including the land to the company.
X has lived in a farmhouse and farmed agricultural land in partnership 60/40 with his son Y since 1 May 1990. On 2 May 2005 they transfer the farmhouse, all farm buildings and land to a company. The shares in the company are held as to 40% by Y and 60% by X. The farm qualified for AR at that time.
On 1 April 2007 X dies, leaving his 60% interest to his other son Z. Although the company has not owned the agricultural land for 2 years, AR will be available on X’s death.
In strictness the provision does not extend to any occupation by
the transferor between the acquisition of control of the company
and the subsequent transfer of the land to the company. If material
such a case should be referred to the Appeals Team.
For further information see Chapter 24 of the Inheritance Tax manual at IHTM24111 et seq.
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