Navigating Legal and Tax Issues in Farm Ownership: Expert Advice from Farmers Weekly’s Business Clinic
Title: Legal and Tax Experts Address Complex Farm Ownership Issue
In a recent query to Farmers Weekly’s Business Clinic, a farmer sought advice on a complex legal and tax issue surrounding the ownership of a redundant building on their farm. The farmer had promised the building to their son in exchange for obtaining planning permission to convert it into a home. However, there was no written documentation of the transfer of ownership, leading to concerns about potential capital gains tax implications.
Legal director and property specialist Tracey Ashford from law firm Thrings addressed the legal issues surrounding the situation. She explained that for any gift of land to have legal effect during one’s lifetime, it must be formalized in a written document signed by all parties and recorded with the Land Registry. Ashford also highlighted the potential risks of not formalizing the gift, including the possibility of a proprietary estoppel claim from the son.
On the tax front, senior tax manager Carly Drummond from MHA provided insights into the potential tax implications of the situation. Drummond emphasized the importance of reporting any transfer for tax purposes and calculating capital gains tax based on the open market value at the date of transfer. She also discussed the implications of leaving the property in the farmer’s will and the potential inheritance tax consequences.
Drummond further outlined options for mitigating tax liabilities, including gifting the property into a discretionary trust or considering business asset reliefs. She advised seeking case-specific advice to determine the best course of action.
Overall, the experts highlighted the importance of addressing both the legal and tax aspects of the situation to avoid potential disputes and tax liabilities in the future. Farmers facing similar complex ownership issues are encouraged to seek advice from legal and tax professionals to ensure compliance and mitigate risks.
