It has been reported this week that the Duke of Devonshire has blocked cyclists from riding through his 30,000-acre Bolton Abbey estate. Not so, say the Duke, who claims that the staff stationed at the bridge giving access to the estate are there to ensure the public adhere to social distancing rules. Cycling UK are calling on HMRC to investigate but what has any of this got to do with the taxman? Well, if the cyclists' claims are true it has potentially serious Inheritance Tax (IHT) ramifications for the Duke.
Where property such as the Bolton Abbey estate is considered important to the UK's national heritage, IHT can be deferred on that property, potentially indefinitely. This is on the proviso that HMRC agrees that the property qualifies as heritage property, and provided that the owner of the property meets certain undertakings imposed on them by HMRC. Fail to comply with those undertaking and the IHT exemption can be taken away.
The conditions are agreed with HMRC on a case by case basis although in each case there will be a minimum threshold to be met. For buildings of outstanding historic or architectural interest, conditions will have to be met relating to maintenance, repair and preservation of the property.
For land connected to buildings of historic or architectural interest, if the land is considered essential for the protection of the character and amenities of the buildings then there will be similar obligations to maintain and preserve the land. Additionally, there will be undertakings required to provide the public with access to the land. It is those undertakings that the cyclists claim the Duke of Devonshire has breached. If the Duke is found to have committed a material breach of his undertakings then this opens up the possibility of an IHT charge based on the current value of the Bolton Abbey estate.
However, the government has acknowledged the impact that Coronavirus has had on the ability of owners to provide full access to heritage property and thus meet their undertakings. In acknowledging these difficulties the government has confirmed that a failure to comply with undertakings in relation to public access of heritage property will not be punished whilst social distancing restrictions remain in place. This 'Covid-19 exception' will be of particular importance in circumstances where, for example, the owner of an important work of art has lent the work of art to a museum so as to comply with their undertaking to provide public access to the piece, but the museum has been closed due to Covid-19.
If HMRC investigate the Duke's alleged breach could the same Covid-19 exception ride to the Duke's rescue? Time will tell.