Grazing land and taper relief

Grazing land and taper relief

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The HMRC have challenged us on a CGT comp in which we have treated the full year for grazing land as a business asset. The land is let under licence for the 7 month grazing season and then left to stand for 5 months as the crop grows back. The HMRC are seeking to disallow business taper on the 5 months, claiming the asset is dormant. Our view is that if the land didn't have the recovery time it would not be usable as grazing land. Does anybody have any experience of such a claim from the HMRC? Thanks
Andrew

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By Claire Kelly
29th Aug 2007 09:58

Grazing land and business asset
I don't know whether it is helpful to mention the fact that in Northern Ireland where we have the conacre system the "tenant" taking the land only gets it for the season to plant and then take the harvest off it. That is not a full year. But the owner of the land gets to claim all the business reliefs such as taper and APR (provided they can be seen to have "farmed" the ground in that they have cut hedges, spread weedkiller, fertiliser etc) so perhaps you could argue with the Revenue that your client has still been running a business in the period they consider does not qualify by spraying, fertilising etc

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By User deleted
29th Aug 2007 12:06

Unreasonable HMRC view
If you look at the Revenue Manuals it talks about farming being 'husbandry' - the farmer looks after and cares for his land to produce good crops and healthy animals. To leave the land to recover is good farming, and as the previous poster states, this includes cutting hedges, repairing fences/gates, weed control, fertilising the land - all things that this farmer has done to maintain the land for grazing later on. The land is still farmland and he is still 'farming' it even if no crop is available yet.

The HMRC argument is absurd. Would they argue that the time between planting a seed and the harvesting the crop is not 'business' time for BATR purposes? Have a look at the farming section of the BIM and quote some phrases back to the Inspector. But 'husbandry' is the key word, and I am sure that the manuals define it in a way that puts a stop to this type of arguement.

Hope you win!!

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By User deleted
29th Aug 2007 10:42

Thanks for that, Claire
We're currently arguing the case with HMRC - will let you know the outcome.

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By User deleted
04th Sep 2007 11:28

Agree completely..
..with your views, James. Indeed, we had written back on that very basis. A couple of phone calls later and the HMRC have dropped the enquiry. I really have no idea why they started it.

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