Concerns rise over agricultural anti-avoidance measures

HM Treasury this week announced changes to the rules for losses that can be claimed by a person from a property business with a relevant agricultural connection.

The changes are designed to prevent tax-generated agricultural expenses being available for relief against the person’s other taxable income, known as ’property loss relief’.

This change arises because Government has become aware of avoidance activity that relies on creating contrived costs in order to claim property loss relief putting substantial amounts of tax at risk. It is likely to lead to further anti-avoidance measures expected to be announced in the Chancellor’s Budget on 21 March.

Mike Harrison, Partner, Saffery Champness, and based in the firm’s Inverness office, comments:"This change is likely impact on people carrying out a genuine agricultural property business as well as anybody contriving to create a tax advantage. The scope of the change is sufficiently wide to mean that legitimate taxpayers will be burdened with proving that tax avoidance was not the motive in any arrangement into which they have entered.

"We have concerns that genuine commercial arrangements will be caught up in this, with the resultant costs and pressures of responding to HMRC enquiries or an investigation; also that such relief will be denied to those that it was introduced to assist in the first place."


The new rules take effect from 13 March 2012.