BPR provides relief from inheritance tax on the transfer of business assets at a rate of 50 per cent or 100 per cent.
But representatives of the estate of Maureen Vigne took HMRC to the Tax Tribunal because it refused to allow BPR on the Buckinghamshire-based livery business she ran.
The business consisted of 30 acres of land which were used for a DIY livery business.
HMRC had claimed that the business amounted to no more than simply letting land for the use of others and therefore that it was an investment business.
But Judge Geraint Jones disagreed with HMRC’s reasoning.
He said: “We are left in no doubt that the Gravelly Way business was a genuine livery business which, from 2008 onwards, was developed so as to be a recognisable livery business offering significantly more than the mere right to occupy a particular parcel of land.
“We are satisfied that any objective observer who had visited the site 2008 – 2012 would have concluded that a business was being run from and on the land which did provide services to those who kept their horses on the land and that no properly informed observer could or would have said that the deceased was in the business of ‘holding investments’.
“That, in our judgement, would have been a wholly artificial analysis.”
Judge Jones did, however, refuse the estate’s appeal for agricultural property relief, saying an “objective observer” would not have thought agricultural activities were taking place on the land.
Jackie Hall, a tax partner at RSM, said: “The decision recognises that BPR may now be available on activities where previously it would have been challenged, such as the grouse-shooting business operated by many landed estates.
“Provided it can be demonstrated that valuable services are also provided, those businesses may now benefit from the relief.
“Some landowners may be celebrating, quietly – it is after all open season for grouse.”