Taxation – Family companies win tax relief

The Court of Appeal has ruled that retirement relief for capital gains tax purposes should be available to all taxpayers, whether they are acting as individuals or through family companies.

The landmark decision came last week in a case in which representatives of the estate of a deceased Norfolk man challenged a High Court ruling in February 1997 on retirement relief in respect of farmland in Norfolk.

The court overturned the High Court decision that relief was not available under section 69 of the Finance Act 1995 on the disposal of land if the land in question constituted a business carried on by the taxpayer’s family company and not by the taxpayer as an individual.

The case centred on the 163-acre Mayfield Farm at Besthorpe in Norfolk which was disposed of by the late Mr SC Harbour in January 1988. The land had been used for over 40 years by his family company for business purposes and on the sale of the property the company had ceased to trade.

The court accepted the argument of relatives that there was nothing in section 69 indicating that at the time a business ceased trading it had to be owned by the individual in order to be eligible for relief.

Lord Justice Robert Walker said that while the statutory provisions which the court had had to consider were ‘something of a labyrinth’, he did not see how the provisions of section 69 could be read as imposing a strict condition of individual ownership.

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