ARE you sure you are a farmer? Of course you are.

You have spent your life on the land and farming is your life. But would the tax man agree? If he doesn’t, you – or your family – could be in for a shock, writes David Perry of AC Mole.

I have seen a number of cases recently where decisions were taken for the best of family, practical or commercial reasons but where no thought had been given to the tax consequences.

Firstly, there was the farmer who had diversified into livery. The business reasons were sound but the potential tax effect was the loss of inheritance tax relief for the farmhouse.

The same might have been true if the farmer concerned had decided to give up ground previously used for growing crops to accommodate a large photovoltaic array. To qualify for agricultural property, relief land has to be occupied for the purposes of agriculture. If it is not, there can be no farmhouse.

Then there was the farmer who had let his land under a grazing agreement. For a landowner to occupy land for tax purposes he must undertake – or contract someone to undertake and then pay for – any hedging and ditching, fertilising, harrowing and tilling.

The safest situation is for the landowner to occupy and farm the land personally.

Great care needs to be taken when land is let to ensure that the paperwork is right and that what actually happens does not inadvertently lead to unintended tax consequences.

The temptation for many farmers is to put off the annual meeting with their accountant to the last minute, when the January tax return filing deadline is looming.

The last thing the accountant will be thinking of at that stage is the tax efficient structure of your business.

The entire focus will be on getting the accounts and tax return done. And that is how really important things get missed.

Meeting when you both have time to talk at length about your plans, ideally on the farm, will give you a much better chance of arranging things tax efficiently.

And with the taxman now demonstrating far more detailed knowledge of farming than was once the case, being well advised is more important than ever.

We would like to hear your views on the current state of farming in the South-West and you can share these with us by completing our twominute survey at http://www .acmole.co.uk/survey/ – we will use the results to draw attention to the issues farmers face.

o DAVID Perry FCA, CTA is a farm tax specialist and a partner with A.C. Mole & Sons. He can be contacted on 01823-624450 or davidperry@acmole.co.uk