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Wholly and exclusively question re land.

I asked my client if the land utilised by his business was used W & E for his business.

His reply was that on quite a large portion of the land he allows farmers to graze their sheep free of charge. He also added that this was necessary otherwise the land would become unusable for his business purposes and that this was a very cost effective solution (being free).

Can my client still claim that the land being grazed is used W & E for his business?

It seems unfair to me for it not to be the case as he would loose the chance to reclaim mortgage interest on that portion of land and also suffer when he eventually sells it in the distant future

Comments gratefully received.

Brian

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04th Oct 2010 14:57

Squatters rights

Your client should be charging the farmers concerned rent. Otherwise after 12 years they could claim squatters rights based on usage.

A related court case occurred about three years ago. Farmer A rented grazing land to Farmer B. Farmer A later sold his landholdings to Farmer C. Unbeknown to Farmer C, Farmer B continued to graze his sheep on the land but paid no rent to Farmer C. 12 years on Farmer B claimed the land by default and Farmer C had no comeback.

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04th Oct 2010 15:46

Surely

He is using his land W & E for his business. Other people are using the land, but the cause of them being allowed to use the land is a need for maintenance.

The present solution is a cost effective/practical solution for all parties, which could be solved by each party billing each other same amount for "mowing/maintenance" and "let of grass park", but since maintenance is VATable and grass park is zero rated you would have an obvious issue.

 

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04th Oct 2010 16:42

!

<cite> Unbeknown to Farmer C, Farmer B continued to graze his sheep on the land </cite>

How big was the farmland that he didn't spot the sheep for 12 years?!  Or had farmer B trained his sheep to hide amongst farmer C's sheep to conceal them?

Anyway, I have a little (more serious) question if I may.  Could the farmer charge a peppercorn rent to the other or does it have a lower limit that must be charged to avoid the squatter issues?

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04th Oct 2010 16:55

Permission/Adverse possession

If the land is being used with the landowners permission then adverse possession cannot be claimed.

Adverse possession is only available where the land has been used solely by the 'squatter' without the landowners permission for a continuous period.

I am going through an encroachment dispute with my neighbour (they have taken part of my land/drive based on their personal opinion alone, no professional advice!) and these are the rules regarding residential land, but it may differ with commercial land.

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By bstock
04th Oct 2010 19:26

Is an exchange of invoices critical?

Many thanks for some very interesting comments.

Trevor mentioned The present solution is a cost effective/practical solution for all parties, which could be solved by each party billing each other same amount for "mowing/maintenance" 

Is it crucial that the parties exchange invoices?

And if so can it be for a merely nominal amount?

Cheers

Brian

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04th Oct 2010 19:55

...
 Apologies, but when I mentioned effective/practical I was being flippant.If they are in the UK and VAT registered then I can’t see how they can get away from the charging/claiming of vat for the respective supply.A tax invoice is necessary and should accurately reflect the value of the supply. Knowingly doing anything else results in various problems, even though both may be registered, such as tax evasion.

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By bstock
04th Oct 2010 21:23

A minor complication

  The land which the client utilises for his business is presently owned jointly with his wife, this I have recommended should be changed to maximise from any CGT savings when eventually sold in the future. At the moment his business is VAT registered but as the land is owned jointly, if any let of grass park invoice was needed  would it have to be provided by  the client & wife, OR the client's VAT registered business?

As to any mowing charge from the farmer I presume this would this be an allowable expense against the client's business.

Am I correct ? (There's always a first time) 

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04th Oct 2010 22:10

...
If the land let as grass park (forget “mowing”, I used that description to describe the service being provided to the company by the farmer) is required/used by the company then presumably it must rent the land from Mr&Mrs as individuals. If that is so then it is the company (as the “tenant of the land”/needs the land for business purposes) are due £X amount from the farmers as rent (grazing/grass park). The farmer then invoices the company £Y for grass/weed control ( or whatever description (maintenance) is most accurate) and they claim the VAT.If Mr & Mrs (as individuals/non-business) were to invoice the farmers directly then they would in effect be saying that the land used by the company is partly private (private to the degree of the time/proportion used by the farmers) and therefore not used for company/business purposes all the time. Further, if farmer charges vat on the “grass control services” then, as presumably Mr &Mrs (as individuals) aren’t VAT registered, they couldn’t claim the VAT back….they would be the end customer and suffer the VAT/expense of the “grass control” maintenance charge of their own land which they rent to their company.Note, this is general information, depending upon the type of business you may well be on a sticky wicket. It is concerning that the land is grazed by sheep, rather than a small piece of land grazed by goats or gypsy horses, ie probably not a small piece of rough ground that is full of weeds etc. I suggest you find out all true correct facts.    

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By bstock
05th Oct 2010 08:19

SoleTrader

  Hi,

My client is a sole trader, so he s in fact a joint owner of the land in any case - that might make a difference?

I believe the sheep are grazed on a large portion of land some of which is used W&E is my client's business and some that I think is not used by him.

No idea whether the other farmers are VAT registered or not at this stage

Once again many thanks for your patience and assistance with this.

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By bstock
05th Oct 2010 16:39

... Just to confirm..

 As my client operates his (sole trader) business W&E on land owned by himself and his wife, and he needs a large part of that land grazed in order to keep it useable for his business, should any letting invoice for green park grazing on that land  be raised by my client? - and  any subsequent invoice from the farmer regarding grass control be an expense against his business?

 

 

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Shouldn't that be "woolly and exclusively"?

Sorry, it's Friday and I couldn't resist...

Apologies to the original poster and everyone who gave a serious answer. Please note there is a follow up question on the same theme here.

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By Nevill
08th Oct 2010 11:21

Care re 'grass keep' arangements

When employed by a large company which owned land all over the UK and used for various purposes until sold for building, my employer was tricked by an estate agent who failed to make sure the correct dates were used in an agreement. With 'grass keep' / grazing agreements they have to be for a certain fixed period and any use after the end of a period can, and did, result in the farmer claiming the land. My understanding is that there should be an agreement for a period of less than a year, and that there should be a new agreement signed each year. The rather arcadic expression of a peppercorn can be used instead of £. Just make sure that your client uses a good cheap solicitor used to drafting such agreements.

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08th Oct 2010 12:32

Farmers obtaining rights...

I was going to say much the same as Nevill - ie that farmers can very quickly gain grazing rights over your land if you don't act sharpish. I was very nearly caught like this when buying a house in Wales, where one of the local farmers is in the habit of "lending" people his sheep as a favour to keep the grass down, only for them to discover 12 months later that they can't get rid of them. Of course the people he lends them to tend to be only the English buyers of property... Several purchasers nearby have now been affected like this.

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