Case Law

The Revenue CAT Manual at Pt 12.5 considers the definition of “business” and quotes definitions made by the courts over the years:

“it denotes the carrying on of a serious occupation”. Town Investments v DOE 1977 1 All ER

“Anything which occupies the time and attention and labour of a man for the purpose of a profit”. Smith v Anderson 1880 15 Ch D

“a serious undertaking earnestly pursued”. Rael Brook Ltd v Minister of Housing and Local Government 1967 1 All ER

“any occupation or function actively pursued with reasonable or recognisable continuity”. Morrison’s Academy 1978 STC

The definition of a “business” was considered in the Irish case of A.E. v Revenue Commissioners 1994 V ITR 686. In this case land was let on conacre and the question was whether this was a business. It was held that it was a business although not a very successful one. However, in the Northern Ireland case; McCall and Keenan (as Personal Representatives of Eileen McLean deceased) v HMRC 2009 SpC 678 it was held that land let on conacre was not a business.

Council case of American Leaf Co. v Director-General 1979 AC 675 considered the definition of “business” in relation to rented property.

In Farmer (Farmers Executors) v IRC 1999 STC (SCD) 321 the UK Special Commissioners held that the net profit was not the only test to be applied when determining whether a business consists wholly or mainly of making or holding investments for business relief purpose. The approach taken by Revenue in applying the ‘wholly or mainly’ test accords mainly with the approach taken in this case.

Gittos v Barkley (Inspector of Taxes) 1982 STC 390 and Griffiths (Inspector of Taxes) v Jackson/Pearman 1983 STC 184 held that the letting of furnished accommodation, whether on a long or short-term basis, and whether for holiday or other purposes, should generally be treated as “investment”.

Revenue and Customs v George 2004 STC 147 (CA) held that a 85% holding in a company owning and operating a caravan park site qualified for the relief.