Longstanding arrangements protecting the transfer of farms from one generation to another could be under threat if wide-ranging HM Revenue & Customs proposals go ahead, warns DSH Chartered Accountants & Business Advisors.
Plans laid out in the Finance Bill would alter the basis of calculating the amount of inheritance tax payable on an individual’s death in cases where property relief has been gained on their assets.
The proposed legislation would come into force in cases where an estate includes both assets that qualify for Business Property Relief (BPR) or Agricultural Property Relief (APR) and a borrowing used to fund their acquisition.
Alison Turner, Tax Manager at DSH, which specialises in the agricultural sector, said while the plans would put an end to any exploitation or abuse of current provisions to lower tax obligations they would also affect countless genuine beneficiaries.
“HMRC should be applauded for its efforts to remove the tax advantages that can be achieved by exploiting BPR and APR,” she said. “But any legislation should be targeted to only those who abuse the system.
“Otherwise, HMRC is simply taking the position that all commercial-based borrowing used to purchase assets that qualify for BPR or APR is exploitative, and all recipients of these relief funds will be affected when the taxable value of their estate is calculated.
“We would suggest that HMRC ensures that any change in legislation offers protection to genuine beneficiaries of BPR or APR and that the focus is solely on those who are abusing the reliefs available purely in order to lower their tax obligations.”
To find out more about DSH Chartered Accountants & Business Advisors, visit www.dsh.co.uk or call 01622 690666.