Quite understandably, the farming community is always on the look out for diversification opportunities. Any chance to supplement income levels is to be welcomed and pursued. However, there are traps, especially when agricultural buildings are put to alternative use. For instance, there may be a loss of Agricultural Property Relief and the exemption from non-domestic rates can be endangered.
In a recent case in the Lands Chamber of the Upper Tribunal, exactly the opposite occurred. A large commercial farmer owned a conventional industrial unit near Bedford. Some of his farmland abutted the unit, which before 2010 had been let out as a furniture warehouse. However that use ceased and, pending a new retail use beginning in 2012, the farmer stored agricultural machinery, animal feed and other items there. An application was made for an exemption from rating but this was denied and an appeal to the Lands Chamber followed.
HMRC argued that the interim use was contrived and unnecessary and did not fulfil the test that during the period in question, the unit was occupied with agricultural land and used solely in connection with agricultural operations on that land. The Valuation Tribunal had also previously decided the test had not been met.
In this case, the presiding Judge did not agree with either this interpretation of the events or the applicable law put forward by HMRC and allowed the appeal. It was accepted that issues of “motive” and “necessity” were not relevant for the purpose of the decision.
It is perhaps, an unusual case, but a good illustration of the rating consequences of a change of use, however temporary that may be.
For further information please contact Andrew Fearn