Tractors descend on High Court as it hears Labour’s inheritance tax raid on family farms and businesses is ‘unlawful’
Chancellor’s inheritance tax The High Court heard today that the raid on family farms and businesses was ‘unlawful’.
As farmers and business owners flocked to the Royal Courts of Justice at the start of a two-day judicial review against the government, lawyers claimed Rachel Reeves had broken the government’s long-standing promise by ‘deciding not to properly consult’ on plans to hit family businesses with death duties.
The hearing heard he had ‘acted unlawfully by conducting a very limited consultation’ on the proposals.
The trial began when tractors were parked outside a courthouse in central London and protesters held up a large banner reading ‘Keep farms and firms family owned’.
Businessman Steve Perez, chief executive of the Global Brands group behind drinks such as VK and Hooch, said the tax raid was ‘poorly thought out’ and added: ‘This came out of nowhere. I guess they don’t understand the effects.’
The case concerns changes to the so-called agricultural property relief (APR) and business property relief (BPR), which were announced at its first meeting. Budget In October 2024.
The plans leave family farms and firms facing a 20 per cent inheritance tax on assets worth more than £1 million from April this year.
Businessman Steve Perez (left) with farmer Tom Martin (centre) and distant friend George Martin (right) outside the Royal Courts of Justice
Tractors line up outside the Royal Courts of Justice ahead of a Judicial Review into the Chancellor’s inheritance tax raid on family farms and businesses
The changes sparked a violent backlash, with farmers driving tractors through central London in protest.
After making an embarrassing U-turn just before Christmas last year, the Chancellor backtracked and raised the threshold from £1 million to £2.5 million, or £5 million for married couples.
But this still leaves farmers and businesses facing inheritance tax bills.
Cambridgeshire farmer George Martin, 74, and his son Tom Martin, 45, have joined forces with campaign group Farmers and Businesses Fair Tax Cut to launch legal action over the changes.
They argue that Treasury documents from over a decade ago, including the ‘Tax Consultation Framework’ (TCF) of March 2011, suggest the government will consult on ‘significant tax changes’.
The plaintiffs argue that no such consultation took place.
By failing to do so, the Court said the Chancellor ‘deprived the plaintiffs of the opportunity to present their cases and voice their concerns’ and ‘therefore acted unlawfully’.
Protesters gather outside the Royal Courts of Justice
Tom Martin said: ‘This legal case is important for everyone affected by the proposed tax changes and I am proud to speak on behalf of the concerns of farmers and business owners whose livelihoods will be affected.
‘By deciding not to engage in proper consultation, the government has knowingly chosen to deny us the chance to influence the new policy and its implementation. “I hope that justice will be served and the court will keep the Government’s word.”
James Austen, partner at Collyer Bristow who worked on the claim, said: ‘The Court is hearing the claim at a difficult and uncertain time for UK farms and businesses, which the Chancellor has chosen to distance from the design and implementation of this controversial tax change that has caused deep concern among many people.
‘The Government’s Tax Consultation Framework, which has been in place for 15 years, has been introduced because proper consultation is vital to ensure tax changes get done right the first time.
‘Long experience shows that tax consultations are essential to avoid damaging unintended consequences and embarrassing U-turns.
‘It is disappointing that the Government has refused to reverse course in this case, leaving plaintiffs with no alternative but to ask the court to honor the Government’s promises.’
Alexander Marcham, Managing Director of Alvarez & Marsal, said: ‘Many of the farms and businesses affected by the Chancellor’s decision have been built over generations and are expected to outlast the current owner.
‘When such significant tax changes are implemented without giving those affected a chance to be heard, it becomes much more difficult to plan for the future.
‘Families are being forced to make decisions about the transfer, investment and future of their companies without clarity or a fair chance to participate in policy development.
‘The court’s decision will be an important moment in bringing greater clarity to the process behind the measures and will have far-reaching consequences.’
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