Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property118. Read the original article for full details.
Tribunal Rules Against Inheritance Tax Relief for Serviced Office Business
A London serviced office company has been denied inheritance tax business property relief, despite providing a wide range of services to its customers. The Upper Tribunal found that the business was still mainly making or holding investments, rather than qualifying as a non-investment business under the relevant tax rules.
The case, The Executors of Keith Denis Lewis Beresford v HMRC, involved a six-floor commercial building at 16 High Holborn, London. Four floors were operated as serviced offices, managed by Orega Management Limited on behalf of Ninecourt Limited, while two floors were let conventionally to commercial tenants. The serviced office operation included reception and telephone-answering support, reconfigurable office layouts, and access to facilities such as meeting rooms, server space, catering, and courier services.
Despite these extensive offerings, the Tribunal concluded that the business activity did not cross the line from investment into a qualifying trading business for inheritance tax purposes. The serviced office side accounted for approximately 75% of Ninecourt’s turnover over five years and produced more gross profit than the conventionally let floors in most years considered. However, the Tribunal determined that the core activity remained property investment, as customers were principally paying for office space rather than for the additional services.
The judgment highlights that even substantial active management, a broad range of customer services, and significant turnover may not be sufficient for a property-based business to qualify for inheritance tax business property relief. The Tribunal focused on the commercial reality of what customers were paying for, rather than the extent of services provided.
This decision is relevant for UK letting agents and inventory clerks involved in serviced office operations, as it clarifies the limits of business property relief eligibility under sections 104 and 105 of the Inheritance Tax Act 1984.
Source: Property118