Property


Court rules in favour of agricultural property relief for elderly farmer EXPERT VIEW


A successful appeal against the HMRC has important implications for farmers, says Ben Taylor.


G


razing licences in the con- text of Agricultural Prop- erty Relief (APR) are a hot


topic at the moment. And the law was placed fi rmly on the side of the farmer in a re- cent appeal against HMRC. The case has just been pub- lished after it went to a fi rst-tier tribunal earlier this year. The rul- ing will be helpful to those farm- ers whose land is used by third parties for grazing – particularly if this route is taken as the land- owner gets older. The case in question – Charn- ley and another v HMRC [2019] – pertains to a Mr Gill who owned a farm of less than 10ha in the north of England. In the latter years of his life, he allowed other farmers to graze their livestock on much of his land under annu- al grazing licences.


Mr Gill died on 20 November 2013 and his estate claimed APR and business property relief. But the HMRC refused the claim for APR over the house, brick barn and other outbuildings, issuing a notice of determination on 1 No- vember 2017.


Wrong approach APR was allowed over the land but on condition of “ownership” rather than “occupation” – which meant relief was not available over the farmhouse. This is be- cause HMRC deemed that the


farmhouse and outbuildings were not “occupied for the purposes of agriculture” in the two years be- fore Mr Gill’s death. Mr Gill’s estate argued that separating the farm into distinct elements was the wrong approach as possession, control and occu- pation of the land remained with Mr Gill.


He also remained respon- sible for attending to hedges, fences, control of weeds, topping and more, which was helpfully demonstrated by Mr Gill’s de- tailed records of his work on the farm – something I have recom- mend to clients in the past.


This was supplemented by one of the graziers describing the ar- rangement as Mr Gill “farming his land using my stock” and that Mr Gill was “the boots on the ground”. Evidence reported by the grazier was that the de- ceased was very active in terms of managing the animals, the land and in respect of the commercial agreement, fees and timings.


HMRC view


The HMRC contended that Mr Gill did not carry out agricultur- al activities throughout the rele- vant period but instead rented his agricultural land. It insisted his actions were not enough to meet the requirements of the legisla- tion. It also argued his records centred on the livestock rather


than the grass as a crop. The fi rst-tier tribunal recog- nised that a wide range of activ- ities can constitute agriculture. It was noted that Mr Gill and his fa- ther had historically farmed the land, that Mr Gill had continued after his father’s death, and that over time Mr Gill made the land available to others.


In coming to their decision, the tribunal put greater weight on the evidence provided by the witnesses as to the nature of Mr Gill’s activities on the farm, re- cords kept by Mr Gill and photos. This led them to conclude that Mr Gill’s activities had al- ways been and remained that of farming. And they concluded that the changing nature of the business was not suffi cient to al- ter this – “in our view, the activ- ities carried out by Mr Gill were those of a farmer, working an ac- tive farm”.


Getting it right Since the deceased was consid- ered an active farmer managing


the farm from his home, it fol- lowed that the farmhouse should qualify for relief. Notably, limited weight was given to the receipt of Single Farm Payments and formal li- censes, with more emphasis put on the work factually carried out by Mr Gill. It is clear from the judgment that evidence of the activities un- dertaken on the farm played a key role in making a decision, so it is important to get that part right where grazing agreements are put in place.


Recent years have certainly seen an increase in the number of cases where grazing arrange- ments are being challenged. The HMRC does not appear to like to the nature of grazing in the con- text of achieving APR on farm- houses and farm buildings. It’s therefore heartening to see that this case is a push in the right direction for the taxpayer. Ben Taylor is a solicitor at Roythornes Solicitors. For de- tails, visit www.roythornes.co.uk.


“ 70 ANGLIA FARMER •DECEMBER 2019


It is heartening that this case is a push in the right direction


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