Making sure you have land at your disposal on the SPS claim date is more important then ever this year, as RPA steps up its scrutiny of claimants.
A recent European Court of Justice ruling and an RPA investigation into dual use have brought the issue into sharper focus.
“Cropping licences may need to be replaced with alternative agreements and grazing licences must be checked to protect the landowner’s SPS claims,” warns James O’Brien of Brown & Co, who has been working with the Central Association of Agricultural Valuers on these issues.
Landowners using short-term cropping licences and claiming SFP on that land run the risk of over declaring the area of land at their disposal. The penalty for intentional over-declaration of more than 20% eligible area is the loss of 100% of that year’s claim plus a bar from the three subsequent scheme years.
Where SFP is to be claimed by the landowner, agreements need to be prepared with great caution. The actual responsibilities of each party must be addressed, rather than just using a document because it was convenient and had been all right in the past, warned Mr O’Brien.
“If a third party is growing and managing a crop on land and the owner continues to claim SPS on that land, that would not now work in many cases for the ‘land at your disposal’ test,” he said.
Licences have been very commonly used but if tested, many of them could be found to be tenancies in reality and the land not at the landowners’ disposal, said Mr O’Brien. What mattered was what was happening in practice.
A relatively straightforward alternative was a short tenancy with entitlements transferred out and back again, with clauses to cover the outcome of CAP reform.
However, this may not suit growers dealing with many different landowners, or landlords needing to retain trading status on the land for tax purposes. Here, a contract option agreement might be a better solution, he suggested. The land would remain under the owner’s management control, using the grower as a contractor who then buys the crop.
Grazing licences may also be affected by the “land at your disposal” requirement – the owner should grow the crop of grass and if the grazier is to carry out operations such as fertiliser and chemical applications, he should act as a contractor, advised Mr O’Brien.