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Farming & Rural Business Community

Meeting with CAAV, by Zoom, 4 May 2021

Author: David Missen

Published: 23 Jul 2021

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Pandemic and lockdowns notwithstanding, the regular annual meeting and exchange of information with the CAAV took place in May – sadly the catering at the attendees’ homes was probably not of the same calibre as that which has traditionally been enjoyed at One Moorgate Place or the Farmers Club, but the discussion was as interesting as ever. As usual a note of the main topics on the agenda is summarised below:

Main topics of discussion

  • The budget, 130% super-deduction and why it wasn’t available to all businesses. CAAV looking for a discussion with the Treasury and see it as another example of Government assuming that all businesses are corporate. An alternative interpretation is that it is intended to give corporates 25% relief despite the current 19% CT rate – and non-corporates get relief at higher rates anyway.
  • Carry back/forward of losses. Apparently the 130% loss due to CAs can be carried forward without restriction, so could be more valuable in later years, particularly where small company marginal rates apply. Calculating the tax impact of capex has just become a whole lot more complicated.
  • Valuation instructions. Once again a plea for clarity which is often lost when the instruction comes from the client who doesn’t generally know what is being valued and why. Suggest that the client should issue the instruction but ask the accountant to brief the valuer on the detail. Also, where part interests are being valued, imperative for clarity in the valuation report as to whether any deduction for part ownership had been incorporated within the figure. There is circumstantial evidence that sometimes the deduction is not claimed at all and sometimes it is claimed twice.
  • Rents – evidence in Wales that the impact of NVZ extension is pushing up rents as farmers look for wider areas to use their slurry. Elsewhere, no clear picture – still pressure from some to take on extra land at high rents whilst others are giving up previous expensive FBTs on renewal. It very much depends on who the neighbours are and there can be volatility even within a single parish.
  • General discussion about the forthcoming impact of BPS withdrawal. After three years of prevarication, some clients now making plans for the future whilst others remain blissfully unconcerned. Potential for real change, but a view that the current level of high commodity prices might obscure that overall picture in the short term. Pointed out that high prices have often been matched by poor yields so once again there will be considerable volatility across the industry.
  • New ELMS schemes were looking encouraging and there had been high interest in the pilots, particularly in arable regions. Preliminary analysis suggests that some arable farms may be able to comply with several standards without too much difficulty and this could bring in 60-70% of the lost BPS – whilst also improving the shooting, which will be drivers for some. Generally expected that the final payment figure will be in excess of the pilot rates, but not known how much higher.
  • Would ELMS monies go to the landlord or tenant? Under current tenancies it will almost certainly go to the occupier, but new leases may change this – difficulties if the payment goes to the landlord but the tenant carries out the work needed to earn it.
  • How to account for biodiversity offset payments? Generally felt that where a lump sum is received upfront for future management, this would be trading income in the hands of the land manager and should be accrued over the life of the project.
*The views expressed are the author’s and not ICAEW’s.