Inheritance tax reliefs come under scrutiny
Farmers are being warned to be exceptionally well prepared, with news that inheritance tax reliefs will come under further scrutiny by HMRC.
Criteria surrounding tax breaks including Agricultural Property Relief (APR) and Business Property Relief (BPR) is likely to become much stricter, following an investigation by the National Audit Office.
This means that in order to qualify, farming families must be extra vigilant on how they structure and operate their businesses, before, during and after the retirement and death of the principal farmer.
One of the key criteria for qualification of these tax reliefs is that the main farmer must be shown to be still farming or at least managing the farm when they died. "Retired" farmers will continue to attract IHT on their final estates. In addition, the main farmer must also be in residence in the main farmhouse at the time of death, for the estate to qualify for relief.
Although a popular choice among many farmers today, giving land over to a renewables project could result in that land being no longer viable for any reliefs.
Another popular tactic among farming families has been to convert redundant farm buildings into other businesses such as holiday accommodation, cafe or leisure activities. Converting these buildings into spaces suitable for a non-agricultural business may also have an adverse effect on any relief which may otherwise have been granted.
It's worth bearing in mind that government schemes, consumer trends and demands may ultimately guide a farming business through the decision of whether to diversify. However, professional farm succession planning advice should be sought before any decision is made, to ascertain any effects on the final amount of IHT which must be paid.
Many papers have reported that the daughter of a Scottish laird is launching a succession battle, in order to gain the rightful title as she sees it, of Lady Colquhoun.
Instead of passing to his daughter, that title instead went to the laird’s second wife. However, this is a very complicated case, made all the more difficult by recent revelations that the daughter, Charlotte Colquhoun, has been acting as a high class escort.
Charlotte was in fact the illegitimate child of a liaison between Sir Malcolm Colquhoun and Susan Armstrong. The couple split before she was born, with each partner going on to form other relationships throughout the years.
Charlotte and her father disagree about the amount of financial contribution that was made towards her upbringing during her formative years, but they both agree that her life took a downward spiral during her teens. She battled to turn her life around and succeeded for a while, but was tempted into becoming a call girl in 2007.
She recently learned that her half brother Patrick is set to inherit the family estate and has set her sights on winning it from him, due to the lack of clarity regarding illegitimate children and inheritance within Scottish clans.