Blake Lapthorn solicitors' Rural team held a Rural professionals' breakfast briefing on the legal issues currently facing the Rural sector on 5 February 2013.

1. Rural Professionals Breakfast
5 February 2013
Mark Charter, Partner and Head of Rural
mark.charter@bllaw.co.uk

2. "If People have full stomachs they can have the
luxury of multiple problems –
if you are hungry you only have one problem"
Nick Tapp

3. Committed to reduce form filling/bureaucracy
Food self sufficiency
CAP reform – there is a role to play for public money to
compensate farmers for environmental benefits
Bovine TB is the most pressing health problem
I am determined that disease in trees and plants received the
same attention as disease in animals
Owen Paterson, Oxford Farming Conference 2013

4. Outlook
Poor crop establishment
Rising food prices
Increasing concern about disease control
CAP reform uncertainty
Land supply shortage
Rent review uncertainty
Other related rural sectors under pressure eg:
 Shooting (game bird cost, PAYE for beaters)
 Equestrian – increased feed cost

5. CAP reform:
Current system ends on 31 December 2013
Golden ticket or simple carry forward?
Irish presidency until end of June 2013
Multi-annual Financial Framework
Reforms will not be ready to apply until January 2015
Will need to be transitional arrangements for 2014
Pragmatism to prevail?

6. Current
Ash dieback (chalara fraxinea) preventative measures
remain in force
New Environmental Stewardship handbooks for any
scheme commencing on or after 1 January 2013
Revised nitrate vulnerable zone maps come into force on 1
January 2013
£15 million Rural Community Renewable Energy Fund to
launch by March 2013
House of Lords vote on abolition of Agricultural Wages
Board (February/March 2013)

7. Cattle and Dairy
Regulation 261/2012 – Producer Organisations (POs) in the dairy
sector
DEFRA Consultation closed on 21 January 2013
What legal structures will POs adopt?
Minimum of 10 members or 6 million litres of raw milk delivered
annually?
Pilot badger culls in West Somerset and West Gloucestershire
postponed to Summer 2013
Hampshire and Oxfordshire from 1 January 2013 amongst counties
placed on annual TB testing
January – October 2012 - 31,146 cattle slaughtered - bovine TB
risen by 12% in last year (Farmers Weekly 25 January 2013)
Schmallenberg virus

8. Agricultureal rights of way
 Giles v Tarry [2012] EWCA Civ 837
 (1) Mohit Dutta (2) Amanda Queiroz v Thomas Hayes [2012]
EWHC 1727 (ch)

9. Agricultural tenancy issues
 Morrison-Low v The Executors of Patterson [2012] CSIH 10
 Environmental Stewardship Handbooks 2013/Case B Schedule
3 Agricultural Holdings Act 1986
 The Agricultural Holdings (Units of Production) (England) Order
2012
 Spencer and another v Secretary of State for Defence [2012]
EWCA Civ 1368

10. Rural Professionals Breakfast
Planning update
Keith Lancaster, Solicitor
keith.lancaster@bllaw.co.uk

11. 1. Removing Ag Tie Restrictions
 Rasbridge, Re Cefn Betingau Farm, Sept 2012
 Restriction in planning agreement
 Wales
 Appn to Lands Chamber (LPA 1925 s84)
 Ag tie related to only part of the land for sale
 Highlights:
– Onerous nature
– Rigorous need for market testing
– Onus of proof rests on the applicant

12. 1. Removing Ag Tie Restrictions
 General rule:
– Market testing is the indicator of need
– Marketed at lower value for a period time
– No offers indicate no need
 Little guidance on market testing
– Welsh Practice Guidance…
– Reasonable period = at least 12 mths
– Advertised to relevant potential tenants/buyers
– Price/rent reflects the ag tie (70-75% OMV)

13. 1. Removing Ag Tie Restrictions
 What had been done?
– Marketed Jul 2008 to Sept 2009
– Price reduced initially 28% and by the end 39%
– Price estimate based on agent’s 40yrs experience
– Price based on 9 comparable properties from agent’s
database
– Advertised in local press 13 times
– Advertised on websites (agents, Rightmove etc)
 Decision
– Application to discharge dismissed
– Market testing not sufficiently rigorous to establish lack
of demand

14. 1. Removing Ag Tie Restrictions
 What were the problems and what was required?
– Of the nine comparable properties only one was subject
to an ag tie
– No detailed objective analysis of the comparable
properties, only basic info given
– Analysis of an experienced valuer inevitably needed and
weight should be given to that expertise
– Failure to keep proper records of interest shown (oral,
emails or www)
– Property should also have been marketed with extra land
not subject to ag tie
– Failure to offer property for rent

15. 1. Removing Ag Tie Restrictions
 What were the problems and what was required? (cont)
– No advertisements in specialist farming press
– No explicit adjustments made in price to reflect general
market movement which should have been distinguished
from the ag tie discount element
– An ag tie restriction over part was in practice a restriction
over the whole
 Lessons equally applicable to ag ties on planning consents
and in England

16. 2. Agriculture and EIA
 General rule: EIA requirement bolted onto the planning system
 Exceptions: include agriculture (where works not “development”)
– EIA (Agriculture) (England) (No2) Regs 2006
– Natural England Guidance (NE311) updated – November
2012 following consultation
 Importance of complying?
– Accrual of criminal offences > fines
– Accrual of civil sanctions
– Compliance is a condition of the Single Payment Scheme
(cross compliance)
– Also check terms of Envtal Stewardship agreements

17. 2. Agriculture and EIA
 Projects covered by 2006 Regs (subject to exemptions and
thresholds):
– Uncultivated land / semi natural area projects
 Aim = improve productivity of land uncultivated for 15 yrs
 Chemical enhancements
 Physical cultivation
 Draining land
– Restructuring land holdings
 Physical operations
 Altering field boundaries
 Re-contouring

18. 2. Agriculture and EIA
 Before starting project:
– Apply to Nat Eng for screening decision
– 35 day determination period
– If “significant effect on the envt” consent needed
 Applicant may ask for a scoping opinion of what ES should
cover
 Apply for consent (including ES)
 Various appeals available

19. 2. Agriculture and EIA
 Criminal offences include:
– Carrying out project without screening decision
– Carrying out project without consent
– Contravening notices (stop or remediation)
– Contravening conditions of a consent
– Knowingly or recklessly providing false or misleading
information

20. Rural Professionals Breakfast
Tax update
Philip Allen, Associate
philip.allen@bllaw.co.uk

21. CGT and Entrepreneurs’ Relief
 Disposal of whole or part of business
 Contrast disposal of asset of business
 Russell v HMRC [2012]
– Only business was land (21h farmed; 6h sold for
development)
– No post-sale change in continuing business
– Fall in profits after sale insufficient
– But what could Mr Russell have done?
 Upturn in property market will raise development opportunities
and ER availability more often

22. Inheritance Tax
Agricultural Property Relief
 Hanson v HMRC [2012]
 First-tier Tax Tribunal held no requirement under legislation for
the land occupied with a farmhouse to be in the same ownership
to get relief

23. Inheritance Tax
Business Property Relief
 N V Pawson v HMRC [2012]
– Upper Tax Tribunal has denied BPR on single Furnished
Holiday Letting
– Must be run with view to profit
– Degree of involvement in management
– Extent of services to holiday makers
– Problem: provision of ancillary services just regarded as part
of investment management

24. Income Tax - relief
 G Pratt & Sons v HMRC
– Farm drive re-surfacing – income or capital expense?
– It was a repair to existing drive, not renewal

25. Income Tax - Farm profit averaging claims
 Donaghy v HMRC [2012]
– Can’t average a profit against a loss
– Loss must be treated as nil profit
– Mr Donaghy’s accountant claimed Human Rights Act 1998
applied: averaging doesn’t solve profit/loss volatility!

26. Income Tax – anti-avoidance
 S10 Finance Act 2012/s127B Income Tax Act 2007
– Individual or partnership
– Makes loss in property business
– That business has a relevant agricultural connection
– No property loss relief against general income for
agricultural expenses arising in connection with “relevant tax
avoidance arrangements”

27. VAT and Self Storage
 More self storage reflects diversification
 Exemption ended 1 October 2012
 Now standard-rated
 Need to identify inputs and apply VAT properly

28. General Anti-Abuse Rule
 HMRC and “abusive tax avoidance schemes”
 Draft Finance Bill 2013
 Closing date for comments 6 February 2013
 Too little guidance about impact on the “grey” cases
 Will affect Inheritance Tax despite warnings

29. Annual Residential Property Tax
 Finance Bill 2013 contains draft rules
 Annual charge – starts w.e.f 1 April 2013
 High-value UK residential properties ie £2m+
 Owned by certain non-natural persons
 ARPT arises if a company or partnership (or collective
investment scheme) meets the “ownership condition” in relation
to a “single-dwelling interest”
 Problems may arise for partnerships with a corporate member
 £15,000 charge for a relevant £2m-£5m interest
 Lots of details to check; more draft legislation published 31
January

30. Disgruntled beneficiaries
 Loose talk costs farms - proprietory estoppel
 Suggitt v Suggitt [2012]
– Assurance, reliance and detriment
– When was your Will (and other documents) last reviewed?