The High Court has granted an urgent hearing, addressing a significant legal challenge regarding the government's inheritance tax overhaul. This comes as a response to the Labour Party's recent policy shift, which has sparked controversy and legal action from various stakeholders.
The core issue revolves around the government's proposed changes to agricultural property relief (APR) and business property relief (BPR). Initially, the threshold was increased to £1 million, but after facing intense backlash from rural communities, Labour partially reversed course, lifting the threshold to £2.5 million. However, this decision has not deterred all critics, as farmers Thomas Martin and George Martin, along with the campaign group Farmers and Businesses for Fair Tax Relief and professional services firm Alvarez & Marsal, have filed for a judicial review.
The crux of their argument is that the government's limited technical consultation on a narrow aspect of the reforms was unlawful. They claim that this consultation fell short of legal standards and breached public law duties, raising questions about the fairness and transparency of the policy-making process.
Despite the ongoing Finance Bill at the Committee stage, the court's focus is on declaring Labour's process unlawful rather than ordering a new consultation or preventing the law's implementation. This unique approach highlights the case's critical importance, as noted by Partner James Austen at Collyer Bristow, who emphasizes the rarity of 'rolled-up' hearings.
The Speaker of the House of Commons has been granted permission to intervene, bringing attention to Parliamentary privilege and the separation of powers. Marvin Rust, head of Alvarez & Marsal tax EMEA, underscores the need for certainty in family businesses and farms, emphasizing the importance of proper consultation in legislative changes. He argues that the lack of consultation contradicts established principles, and the case's outcome will significantly impact the future of inheritance tax policies in the UK.
