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Consider grass keep arrangements carefully

Mon 30 January 2017

‘If used correctly, a grazing licence agreement can allow a landowner to claim under the Basic Payment Scheme and provides protection against breaches of Cross Compliance by a grazier’ says Jenny Cox of Stags Professional Services. ‘However, we often see grazing licences being used incorrectly and this leads to risks.’

‘If you are claiming BPS and selling your grass, it is important that you retain management control of the land by being responsible for all field work, otherwise you may be subject to penalties under the Rural Payments Agency rules’

‘Grass keep is also often used as a tax planning strategy in order to obtain relief from Inheritance or Capital Gains tax. However, increasingly stricter HMRC rules mean that a grazing agreement on its own is unlikely to be sufficient for you to prove that you are engaged in farming activity’

If you are using grass keep as part of your tax planning strategy then it is important to take further advice from your accountant and property professional. ‘There are simple things that you can do to help to demonstrate ‘in hand’ farming, for example selling your grass at an annual auction or by tender’ says Jenny.

For more information on this and to see details of Stags annual Grass Keep Sales, please visit our website or contact Stags Professional Services on 01392 439046 to be put in touch with your local professional who will be happy to discuss this issue further.

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