Capital Taxes on Farms & Estates - An Accountants' Toolkit - Learn Live

Introduction

This 6-hour virtual classroom seminar (split across two sessions) will look in depth at the impact of the two major capital taxes, Inheritance Tax (IHT) and Capital Gains Tax (CGT), on farmers and landowners. Consideration will be given to the impact of farming for the environment. There has been a farming revolution post 30 October 2024 and 50% APR and BPR from April 2026. Lifetime planning has taken focus with use of the £1million at 100% APR/BPR as a focus. Heritage property and Woodland Relief have also come back into focus with the reduction in APR/BPR.

The session will not only look at the legislation but will also examine the relevant case law and consider HMRC’s current approach to collecting tax from the farming industry, for example the recent cases of Tanner and Butler on “holding investments” s.105(3) IHTA 1984.

There will be a focus on the current HMRC target areas of tax collection, including property income versus trading income, occupation and amenity value. The need for quality accounts and working papers together with forensic understanding of “occupation and ownership” tied into the farm business has never been more high with the forensic analysis needed for succession planning.

What You Will Learn

This live and interactive session will cover the following:

• How IHT and CGT impacts on farmers and landowners and how the farming industry has focused on the 50% APR/BPR crisis and the potential IHT liabilities
• Spring Budget 2024 - extending APR for ELMs and removal of the tax advantages of furnished holiday accommodation (FHA) from April 2025
• How forensically to identify, approach and tackle the relevant issues through understanding the business and accounts working papers
• The importance of farm valuations for the IHT liability calculations and all tax planning
• Vigne v HMRC [2018] UKUT 357 (TCC) and enhanced livery together with farming for the environment - total rethink over farm diversification disclosure and enterprise accounts
• Tanner and Graham, FHA and the power of lavish services but a total overhaul to the “hotel”/trade is the way forward as part of the whole tourist offering
• The importance of BPR, Rollover and BADR for areas of farm development potential
• The planting of trees and the small development opportunity - correct accountancy
• The farm revolution - lifetime gifting together with an update to all Wills, Partnership Agreements and succession planning together with IHT and CGT calculation
• How the accountancy and tax profession need good agricultural lawyers for understanding farm ownership for capital taxes protection
• How agricultural lawyers need strong farm accounts and to understand the significance there
• Using the ‘Land Capital’ Account - the importance for understanding the use in the accounts and partnership agreement
• Development land - compulsory purchase (CPO), understanding tax treatment and loss of hope value - the need to identify the make-up of CPO payments between land and income compensation
• Awaiting the results of the farming for the environment working party - what to do in the gap
• 'Slice of the Action' schemes - CGT protection and Overage - capital taxes protection and accounts disclosure
• Succession planning helps set out what the family needs in the new tax and ever evolving farming changes
• The importance of the updated Partnership Agreement and the Wills, especially in the context of the Trust Registration Service (TRS) and 100% BPR on the first £1million
• The need to work with other professionals to improve the client's tax position ensuring that binding legal agreements are in place for capital taxes protection and strong valuations - consideration around AOC (Agricultural Occupancy Condition)
• The importance of accounts working papers and tax return disclosure in respect of understanding of all the changes and Will drafting
• How is the farm owned? - Identification of partnership property Ham v Bell [2016] EWHC 1791 (Ch) - farm accounts can be wrong and need rectification
• Lifetime gifts to solve the problem - meticulous planning of IHT v CGT plus future tax liabilities
• The risk of Gifts with Reservation of Benefit (GROB) on all the lifetime transfer (new case of Chugtai)
• Buying and selling a farm (also incorporates Capital Allowances)
• Restructure the trade rather than “push over the investment line” - good understanding and recording of the operation
• IHT enquiries and how to avoid them - full disclosure on the IHT400 with strong valuation working all tied into the accounts
• Woodlands Relief revival - following 50% APR/BPR tied into general woodland tax planning
• Review of Tanner, Kingsworthy Meadow Fisheries, Vigne, Butler and Firth in terms of diversification restructure to achieve BPR s.105(3) IHTA 1984
• James v James [2018] EWHC 43 (Ch) importance of strong Will file and strong attendance and tax planning notes and Hall re provision of IHT liabilities
• Larke v Nugus [2000] - the problems of incorrect DIY Wills - Williams, Abrahams - Will drafters must see Accounts
• Protecting capital taxes around the rise of dispute cases - Ham, Davies, James, Gee, Horsford, and Guest (Supreme Court)
• Total focus on accounting for tenancies - dilapidations, improvements and new barns
• Farming for the environment - still awaiting the results of the working party, importance of accounts disclosure - accounting policies in the interim
• Every set of farm accounts “can highlight capital taxes concerns” and the accountant must be prepared to read the important signals within the Accounts for tax planning problems and positives
• The Lane case and partnership understanding of cessation and inclusion in the Will

Recording of live sessions: Soon after the Learn Live session has taken place you will be able to go back and access the recording - should you wish to revisit the material discussed.