14 March 1996

Landmark case could overturn IACSpenalties

A GROUP of farmers is set to win a landmark case in the European court, relating to more than £3m of subsidies.

The 120 producers are challenging the IACS penalty rules, which in 1994 led to MAFF withholding area-linked arable and beef aid.

Where the set-aside and forage area was overstated by more than 20%, MAFF withheld all payments, even if there was no evidence of fraud.

Together with the NFU and Bristol-based solicitors Burges Salmon, the group claims the severity of the penalty "infringed the principle of proportionality". In other words, not paying anything was unduly severe.

"To penalise farmers who make entirely innocent errors by threatening their livelihood is absurd," says Burges Salmons William Neville. "Such penalties should be reserved for those who abuse the system or make deliberately false statements."

His comments follow last weeks upholding of the case by the EU Advocate General, a strong indicator as to the way the European Court will rule.

The Advocate Generals report says it is "manifestly inappropriate" to apply such severe penalties where a farmer has made an innocent mistake and there has been no fraudulent intent.

Mr Nevilles hope now is that the EU court will make a ruling within three months and that MAFF will pay up within three months of that.

One farmer eagerly awaiting the outcome is Peter Turner, Oxstall Farm, Bradford-on-Avon, Wilts. He says he was denied over £40,000, money which he should have received in late 1994.

"That money should have been in our bank account or working for the business, but I did not get a penny," he says. With arable incomes on the way down, and milk prices also under pressure, the cash is vital, he stresses.

Should the EU case yet prove unsuccessful, Mr Turner plans a legal claim against the firm which prepared his IACS forms.

Meanwhile, NFU legal adviser Jane Adderley cautions against expecting full repayment of the withheld amounts. The penalty rules have since been amended and although a sliding scale now applies, the penalty principle still exists, she explains.

A MAFF spokesman said this week that it would comply with any EU ruling. &#42