blake lapthorn rural professionals breakfast - oxford - 13 february 2013
DESCRIPTION
Blake Lapthorn's Rural team hosted a Rural Professionals breakfat at Oxford on 13 February 2013.TRANSCRIPT
Rural Professionals Breakfast
13 February 2013Mark Charter, Partner and Head of Rural
"If People have full stomachs they can have the luxury of multiple problems –
if you are hungry you only have one problem"Nick Tapp
Committed to reduce form filling/bureaucracy
Food self sufficiency
CAP reform – there is a role to play for public money to compensate farmers for environmental benefits
Bovine TB is the most pressing health problem
I am determined that disease in trees and plants received the same attention as disease in animals
Owen Paterson, Oxford Farming Conference 2013
Outlook
Poor crop establishment
Rising food prices
Increasing concern about disease control
CAP reform uncertainty
Land supply shortage
Rent review uncertainty
Other related rural sectors under pressure eg:
Shooting (game bird cost, PAYE for beaters) Equestrian – increased feed cost
CAP reform:
Current system ends on 31 December 2013
Golden ticket or simple carry forward?
Irish presidency of the European Union until end of June 2013
Multi-annual Financial Framework
Reforms will not be ready to apply until January 2015
Will need to be transitional arrangements for 2014
Pragmatism to prevail?
CurrentAsh dieback (chalara fraxinea) preventative measures
remain in force
New Environmental Stewardship handbooks for any scheme commencing on or after 1 January 2013
Revised nitrate vulnerable zone maps come into force on 1 January 2013
£15 million Rural Community Renewable Energy Fund to launch by March 2013
House of Lords vote on abolition of Agricultural Wages Board (February/March 2013)
Cattle and Dairy
Regulation 261/2012 – Producer Organisations (POs) in the dairy sector
DEFRA Consultation closed on 21 January 2013 What legal structures will POs adopt?Minimum of 10 members or 6 million litres of raw milk delivered
annually?Pilot badger culls in West Somerset and West Gloucestershire
postponed to Summer 2013 Hampshire and Oxfordshire from 1 January 2013 amongst counties
placed on annual TB testingJanuary – October 2012 - 31,146 cattle slaughtered - bovine TB risen
by 12% in last year (Farmers Weekly 25 January 2013)Schmallenberg virus
Agricultural rights of way
Giles v Tarry [2012] EWCA Civ 837(1) Mohit Dutta (2) Amanda Queiroz v Thomas Hayes [2012] EWHC 1727 (ch)
Agricultural tenancy issues
Morrison-Low v The Executors of Patterson [2012] CSIH 10Environmental Stewardship Handbooks 2013/Case B Schedule 3 Agricultural Holdings Act 1986The Agricultural Holdings (Units of Production) (England) Order 2012Spencer and another v Secretary of State for Defence [2012] EWCA Civ 1368
1. Removing Ag Tie Restrictions
Rasbridge, Re Cefn Betingau Farm, Sept 2012
Restriction in planning agreementWalesAppn to Lands Chamber (LPA 1925 s84)Ag tie related to only part of the land for sale
Highlights:– Onerous nature– Rigorous need for market testing– Onus of proof rests on the applicant
Planning
1. Removing Ag Tie Restrictions
General rule: – Market testing is the indicator of need– Marketed at lower value for a period time– No offers indicate no need
Little guidance on market testing– Welsh Practice Guidance…– Reasonable period = at least 12 mths– Advertised to relevant potential tenants/buyers– Price/rent reflects the ag tie (70-75% OMV)
1. Removing Ag Tie Restrictions
What had been done?– Marketed Jul 2008 to Sept 2009– Price reduced initially 28% and by the end 39%– Price estimate based on agent’s 40yrs experience– Price based on 9 comparable properties from agent’s
database– Advertised in local press 13 times– Advertised on websites (agents, Rightmove etc)
Decision– Application to discharge dismissed– Market testing not sufficiently rigorous to establish lack of
demand
1. Removing Ag Tie Restrictions
What were the problems and what was required?– Of the nine comparable properties only one was subject
to an ag tie– No detailed objective analysis of the comparable
properties, only basic info given– Analysis of an experienced valuer inevitably needed and
weight should be given to that expertise– Failure to keep proper records of interest shown (oral,
emails or www)– Property should also have been marketed with extra land
not subject to ag tie– Failure to offer property for rent
1. Removing Ag Tie Restrictions
What were the problems and what was required? (cont)– No advertisements in specialist farming press – No explicit adjustments made in price to reflect general
market movement which should have been distinguished from the ag tie discount element
– An ag tie restriction over part was in practice a restriction over the whole
Lessons equally applicable to ag ties on planning consents and in England
CGT and Entrepreneurs’ Relief
Disposal of whole or part of businessContrast disposal of asset of businessRussell v HMRC [2012]– Only business was land (21h farmed; 6h sold for
development)– No post-sale change in continuing business– Fall in profits after sale insufficient– But what could Mr Russell have done?
Upturn in property market will raise development opportunities and ER availability more often
Inheritance Tax
Business Property Relief
N V Pawson v HMRC [2012]– Upper Tax Tribunal has denied BPR on single Furnished
Holiday Letting– Must be run with view to profit– Degree of involvement in management– Extent of services to holiday makers
Income Tax - relief
G Pratt & Sons v HMRC– Farm drive re-surfacing – income or capital expense?– It was a repair to existing drive, not renewal
Income Tax - Farm profit averaging claims
Donaghy v HMRC [2012]– Can’t average a profit against a loss– Loss must be treated as nil profit– Mr Donaghy’s accountant claimed Human Rights Act 1998
applied: averaging doesn’t solve profit/loss volatility!
Income Tax – anti-avoidance
S10 Finance Act 2012/s127B Income Tax Act 2007– Individual or partnership – Makes loss in property business– That business has a relevant agricultural connection– No property loss relief against general income for agricultural
expenses arising in connection with “relevant tax avoidance arrangements”
VAT and Self Storage
More self storage reflects diversificationExemption ended 1 October 2012Now standard-ratedNeed to identify inputs and apply VAT properly
General Anti-Abuse Rule
HMRC and “abusive tax avoidance schemes”Main purpose is obtaining tax advantage ie anything more than incidentalDraft Finance Bill 2013Chance to comment ended 6 February 2013Double reasonableness testToo little guidance about impact on the “grey” casesWill affect Inheritance Tax despite warnings
Annual Residential Property Tax
Finance Bill 2013 contains draft rulesAnnual charge – starts w.e.f 6 April 2013High-value UK residential properties ie £2m+ @ 1 April 2012Owned by certain Non-Natural PersonsARPT arises if a company or partnership (or collective investment scheme) meets the “ownership condition” in relation to a “single-dwelling interest”Problems may arise for partnerships with a corporate member£15,000 charge for a relevant £2m-£5m interestRelief for farmhouses – check criteriaLots of details to check; more draft legislation published 31 January incl extensions to CGT
Disgruntled beneficiaries
Loose talk costs farms - proprietory estoppelSuggitt v Suggitt [2012]– Spendthrift son– Assurance, reliance and detriment– Vital to review clients’ wills (and other documents)