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Estate agent warns on tax.

Farmers and landowners were warned by estate agent Strutt and Parker to look at the tax implications of any business decisions they make following CAP reform.

According to the company's tax partner Philip Hutley, farmers could make a costly mistake if they don't look at the long and short term tax implications of any changes they make to their businesses.

Due to the "decoupling" of EC subsidy from production, these choices now include giving up farming altogether to become a "custodian of the land".

Mr Hutley said: "Every decision has to be considered in the round ( it's not just a case of `oh, we'll cut the machinery this week and make a few staff redundant next week'. It has to be looked at in a wider context than just the profit and loss account.

"There are five main taxes ( income, capital gains, inheritance, stamp duty and VAT ( and one might have to look at all five before making any change."

Mr Hutley was speaking at a special lunch hosted by Tom Richardson, who heads Strutt & Parker's Consultancy division.

The first hotly discussed talking point was the threat posed to farming's 100pc inheritance tax relief.

To qualify for the relief it has to be clearly established that the land in question has been used for the business of farming.

But with the new CAP reforms allowing landowners to effectively give up the day to day business of farming, there is concern about whether such land will still qualify for agricultural relief.

Strutt & Parker's lunch guests certainly had their doubts. Diana Davidson, of Farrer & Co, solicitors, said: "As an inheritance tax lawyer, I do wonder whether proper attention is being paid to the fact that the definition of farming is really quite narrow for inheritance tax purposes."
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Publication:The Journal (Newcastle, England)
Date:May 6, 2005
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