lease of land - replanting obligation by windfarm?

<p>When a developer of a wind farm fells trees in order to install its turbines, it is under a legal obligation (part of planning consent) to replant the trees elsewhere.&nbsp;</p><p>Our client (land owner) has been approached by a developer.&nbsp; The developer will enter into a 10 year lease with the client.&nbsp; The developer will pay &pound;x per hectare of land.&nbsp; The developer needs to plant trees so it undertakes to do so on the land.&nbsp; After 10 years the lease will lapse and the trees will essentially revert to the client.&nbsp; The developer has no interest in this, it is a pain in the neck for them but it is a stipulation of the planning consent.</p><p>We know that income from commercial forest operations is exempt; however the rent from the land would appear to be taxable in the normal manner.</p><p>I am concerned that there is an angle for HMRC to say that the developer is making improvements to the asset (land) under the lease and that we may have a deemed premium.&nbsp; We estimate that the value of 10 year old trees is &pound;3k per hectare.&nbsp; On that basis of 100 hectares the client would appear to be getting &pound;300k value from this?</p><p>Any thoughts?</p>

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Steve Kesby |
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blok |
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