Worcestershire farm secures inheritance tax victory

The future of a Worcestershire farm has been secured after its legal advisers helped it save £300,000 by successfully negotiating Agricultural Property Relief (APR).

The case is being used to highlight the importance of farming families reviewing their situation to minimise their inheritance tax liability.

In this case, the land was owned by a mother and father, but farmed by their son, who was at risk of being forced to sell when his parents both died within a short period of each other.

See also: Business clinic – Keep farming to maximise IHT relief

Gary Priest, partner at law firm MFG Solicitors, had been working for the family before the parents passed away – reviewing the family’s position to help them claim APR, which would otherwise have been denied due to the ownership arrangements.

The father and son went into business as partners, but the father needed to survive for two years for relief from inheritance tax.

Unfortunately, he passed away within the two-year period.

After he died, the mother and son went into partnership, but she also died within two years of becoming a partner.

However, she inherited her late husband’s business activity, which added together, exceeded two years allowing the relief to be claimed.

Mr Priest said: “This was a complicated case underpinned by a family tragedy – the loss of two loving parents within a few years of each other.

“The APR to which the family should have been entitled was worth a colossal sum of money – potentially £300,000 – and if we had not acted while both parents were still alive, the entitlement to the money would have been lost forever.

“They were a genuine, hard-working farming family who just happened to have a business out of step with the rules until they sought the right legal advice.”

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Are you, like many other farms, missing out on tax claims for R&D?

If you’re a limited company, you could be eligible for tax credits if you’re carrying out R&D on your farm. For more information and to find out if you’re eligible visit our R&D tax credits page.

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