Rural advisors respond to BBC Panorama inaccuracies

Responding to the BBC Panorama programme ’The Money Farmers’, screened earlier this week, rural advisers Saffery Champness comment that while a loophole in the way CAP subsidies are processed was well covered, they claim that the documentary missed the point of subsidy payments coming from the EU, not UK taxpayers, and are subject to UK Income or Corporation tax.

Mike Harrison, a partner of Saffery Champness Landed Estates and Rural Business Group explains: ’The Panorama programme implied that UK taxpayers are footing the bill for farm subsidies. This is simply not the case. All farm subsidies and grants are paid by Defra, and the Scottish and Welsh Assembly Governments, directly out of EU funds ’ UK taxpayers don’t pay a penny.

’Additionally, all landowners, farmers and farm businesses are taxed on their incomes, which include the subsidies received. Consequently, HM Revenue & Customs receive tax on the subsidies paid out depending on the overall level of income. For large non-corporate farm businesses that can mean that 50% is paid to the Treasury.

’Whilst the programme highlighted how the current system allows investors outside the farming sector to buy the right to claim agricultural subsidies, this activity is almost entirely confined to Scotland where it is possible to rent or purchase large acreages of open moorland or hill that are not farmed in any conventional sense. In most other areas of the UK, this type of land is occupied by active working hill farmers who need the subsidies to make ends meet. In these areas there is no financial incentive for working farmers to sell their entitlement to non-farmer ’investors’ such as the one interviewed by Panorama.

’Although large landowners and farm businesses can receive very substantial subsidy payments, this is how the present system, based on hectares owned or farmed, is designed and operates’, says Mike Harrison, who adds: ’The public is generally unaware that subsidies are also based to a considerable extent on the environmental works and inputs that farmers need to carry out to be eligible for payments. Also, these businesses are generally employers who create and sustain jobs in the rural community.

Mike Harrison concludes: ’If a cap of ’250,000 on subsidy payments is introduced, as has been proposed by European Agriculture Commissioner Dacian Ciolos, then it is likely that larger farms and estates would be very adversely affected compared to farmers with smaller land holdings. It would be very difficult for these businesses to simply restructure. As the current system is on a per acre basis, then isn’t this fair to all farmers?"