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Will Business Asset Disposal Relief be relevant?

Potential farm sale but retaining farmhouse and some older outbuildings

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A sole trader farmer has received details of a potential offer for most of the farm's 200 acres and certain farm buildings. The offer will be approx £1,000,000.The farmer wishes to retain 8 acres and the farmhouse plus older outbuildings with a view to keeping a small flock of sheep. The existing cattle herd will be disposed of prior to the farm sale. Will Business Asset Disposal Relief be relevant or will CGT rule?

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By David Ex
20th Aug 2021 12:49

With proceeds in 7 figures, definitely worth taking some professional advice.

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By DKB-Sheffield
20th Aug 2021 14:21

I believe the OP is an accountant per previous posts?

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By David Ex
20th Aug 2021 16:02

DKB-Sheffield wrote:

I believe the OP is an accountant per previous posts?

Oh, OK. The phrase “Will Business Asset Disposal Relief be relevant or will CGT rule?” made me think it was a lay person.

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By DKB-Sheffield
20th Aug 2021 14:36

Hi

I don't want to say "yes" or "no".

What has your assessment of the facts suggested?

Why do you think it would attract BADR?

More importantly, why do you think it doesn't?

I'm assuming the sale of the herd was an aside question - potentially aimed at providing proof of an ongoing trade?

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paddle steamer
By DJKL
20th Aug 2021 17:00

I think the cows are a red herring, yes they are different from sheep but they are still farming. The key question I think the OP has is, can their client claim BADR when only part of the business is to be sold and they will be carrying on the same trade on a reduced scale?

On this one I would be away to a decent size firm with a strong agricultural client base, in Scotland someone like Johnston Carmichael

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By DKB-Sheffield
20th Aug 2021 18:10

DJKL wrote:

I think the cows are a red herring

Ah, I missed the bit about herrings - that's fisheries - I thought we were just dealing with onshore farming!

DJKL wrote:

The key question I think the OP has is, can their client claim BADR when only part of the business is to be sold

I had assumed that was the case but, there's not really enough in the question to advise either way (hence the "why" or "why not" questions and a request for the OP to share their background research).

I do agree with you though, a referral to an agrucultural specialist is definitely to be advised - if only to supply the answer to the question of whether the cows, sheep, and herrings are evidence of an ongoing trade!

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By Tax Dragon
22nd Aug 2021 06:30

There's very likely a case to be built here for BADR to apply (BADR is a CGT rule, so, like your first respondent, I don't understand your closing dichotomy).

However, on these numbers, it's worth getting someone else to build that case. (If you get it wrong that could be a big knock. And if the conclusion is that BADR is not due, you will have a more authoritative explanation of that conclusion to provide to your client than you are currently able to provide.) So I agree with the existing responses.

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