Grazing licences in the context of Agricultural Property (APR) are a hot topic for HMRC at the moment.
The recent case of Charnley and another v HMRC [2019] has seen the law firmly placed on the side of the landowner in this important appeal against HMRC.
Here’s what happened;
- Mr Gill owned circa 22 acres of land with a farmhouse and farm buildings and in his later years allowed a grazier on his land.
- Mr Gill died on 20 November 2013 and his estate claimed APR and Business Property Relief (BPR).
- HMRC issued a Notice of Determination on 1 November 2017 refusing the claim for APR over the house, barn and other outbuildings. APR was granted for the land based on ‘ownership’ and not ‘occupation’.
- This meant APR was not available on the farmhouse. HMRC viewed the house and the buildings not to be meeting the requirements of being ‘occupied for the purposes of agriculture’ in the 2 years leading to Mr Gill’s death.
- Mr Gill’s estate argued that separating the farm into distinct elements was the wrong approach as possession, control and occupation of the land remained with Mr Gill.
- As a licensor Mr Gill was responsible for attending to hedges, fences, control of weeds, topping etc. HMRC contended, noting that Mr Gill was renting his land and not carrying out agricultural activities (his licensor obligations).
- The case was appealed to The First Tier Tribunal and it was recognised that the activities Mr Gill had been undertaking did constitute agriculture.
- Since Mr Gill was considered an active farmer managing the farm from his home, it followed (the remaining conditions satisfied) that the farmhouse should qualify for relief.
It’s clear from this decision that evidence of agricultural activities on the farm undertaken by the landowner played an important role. It is vital that agreements are tailored to the individual’s position and so its important to obtain professional advice before entering into any agreements as they may have lasting consequences.
Baileys and Partners, surveyors and land agents are actively engaged in advising and preparing agreements, whether they be Farm Business Tenancies, Grazing Licences, Mowing Licences or Profit agreements.
Please do contact one of the team at Baileys and Partners you would like to discuss this.
