A recent tribunal case has highlighted the need for those intending to benefit from Agricultural Property Relief (APR), to continue to actively farm in their last years of life.
The case, known as Charnley v HMRC, showed the need for clear evidence of active husbandry. HMRC argued that the house and buildings associated with the farm land were not ‘occupied for the purposes of agriculture’ and therefore there would be no tax relief. The executors argued that the farmer in question had continued to actively farm until his death even if most of the land was subject to grazing licences.
The Tribunal accepted that the farmer had continued to undertake the day-to-day husbandry of the grass and animals, so had been actively farming. The farmhouse and buildings therefore qualified for APR.
The farmer remained responsible for attending to hedges, fences, control of weeds, topping and was very active in terms of checking and managing the animals. This was supported by detailed records that the farmer kept along with witness testimony to back these up.
Importantly, the distinction was made that active farming husbandry was being undertaken, rather than just property maintenance. Having grazing licences alone was not enough, it had to be proved that the farmer was undertaking the care and production of the grass and thereafter selling that grass. In addition, these activities also continued right up until the date of death.
Very little weight was given to the fact that the farmer continued to receive subsidy payments or to the presence of the grazing licences, so these cannot be relied upon to show active farming.
This case is a useful reminder to those wishing to benefit from APR that they must make sure any arrangements in place are backed up by actual farming activity appropriate to the property in question.
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