-
eNewsletters
Sign up and receive regular eNewsletters by email
-
Contact
Want to know more or have an enquiry? Send us a message...
News
-
Planning for the Unexpected
16Sep2010
As Benjamin Franklin famously stated “the only certainty is death and taxation” which to a great extent is true, but one of the greatest dangers to landed Estates is unexpected events.
It may well be possible to plan for death but to plan for the unexpected takes time and experience.
The recent rejection of HMRC’s appeal against the first tier tax tribunal decision in the case of Brander (Personal Representative of the Late Fourth Earl of Balfour) potentially gives landed Estates some hope that their Estates may not be treated by the Tax Authorities as pure investment vehicles. However the owners of such Estates must always be vigilant to take action that will protect future generations and not just from the taxman.
Many Estates, particularly in the Highlands, although viewed as assets are often treated by owners as places in which to relax away from the everyday pressures. Whether due to the beauty or romance of the surroundings this can often mean that hard headed business strategies, normally employed elsewhere, are put to one side.
The often perceived dominance of the ‘Estate’ within the local community whilst often symbiotic, occasionally leads to altruistic decisions that could have significant implications for what are highly valuable assets.
Allowing a farmer to graze his stock on Estate ground without a formal agreement and accepting even a bottle of whisky in goodwill could be construed as a tenancy: potentially giving the farmer security of tenure and possibly the pre-emptive right to purchase ground should the estate ever be sold. Forgetting to obtain confirmation from a grazier that stock has been removed and accepting rental without a proper grazing agreement in place could potentially give the farmer a far greater length of tenancy than previously envisaged.
Farming, often perceived as a ‘cuddly’ profession, can open up further significant implications for landowners. Cross compliance rules can see an illegal or forbidden activity carried out by a land occupier bring about the withdrawal the Landlord’s subsidies, even if they were unaware of the activity.
And it’s not just farming: Incorrectly recording the in-hand stalking records or those of the sporting tenant can knock significant amounts off an Estate’s capital value. The effects of poaching may have similar effects.
While many estates rely upon rental income from long term tenants, unless documentation is served correctly, what was intended to be a tenancy for a fixed period can end up giving a tenant lifetime security of tenure.
The above cases may seem extreme, but they serve to demonstrate that it is not always the failure to legalise agreements, but that simple errors or the desire to ‘help out’ that can have a major impact on the value of an Estate.
The recent proliferation of cycle paths and the core path network, if not properly directed, can have a very real impact upon the amenity and consequently the desirability of an estate.
In order to protect an Estate’s value, owners should plan on the hypothetical basis of ‘what if I decide to sell next year?’, to look at all activities and agreements whether written, verbal or implied and assess how an unconnected third party may view them.
If there is any ambiguity then steps should be taken to remedy them, because although there may be no plans to realise assets, the unexpected has a habit of being, well, unexpected.
Paul Nicoll | Bell Ingram | Director
01631 566 122
paul.nicoll@bellingram.co.ukRead Paul's article as it appeared in the Scottish Field Sept 2010 Edition