The taxman calls time on the grazing licence
Rural landowners’ reliance on grazing licences is likely to fall following the case of Charnley and another v HMRC, which makes it easier than ever for HMRC to challenge grazing arrangements.
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Under the case, a Mr Gill allowed a number of other farmers to graze their livestock on his land through annual grazing licences. When he died in 2013, HMRC said it was willing to grant agricultural property relief (APR) from inheritance tax on the land but on the condition of ownership, rather than occupation.
However, his estate’s claim for APR to also apply to his farmhouse, brick barn and other outbuildings was rejected by HMRC.
The case was eventually reversed on appeal, but it’s becoming increasingly complex for landowners to remain eligible for agricultural property relief – the grazing licence is no longer a reliable way to maintain a trading status.
Instead, landowners should consider the use of livestock joint ventures, which are a far more robust way of demonstrating trading status. It’s a little more work, but widespread assumptions that it’s a significant drain on time are wide of the mark, particularly when Knight Frank is able to run and administer livestock joint ventures and take care of the paperwork and accounting.
This is an evolving situation, so we recommend landowners take advice.
Tom Heathcote, Agri-Consultancy