Claiming APR - 7 year occupation requirement

Trusts Discussion
1

I’m dealing with an estate and the clients wish to claim agricultural property relief. The deceased owned a 25% share in a farm and had owned it for more than 7 years prior to his death. He didn’t live there and he didn’t farm it. The other owners of the farm are his children who haven’t farmed it either.

I have a query about the occupation and whether this requirement is met:

Tenant A died August 2016.
Notice to Quit was served on B, A’s widow, which gave until February 2018 to vacate the farm. The executors of his estate became responsible for the tenancy including payment of rent.
B gave notice that she would leave the farm in October 2017.
The farm was marketed in September 2017 and in October 2017
A couple of prospective tenants fell through - the final one being in December 2017.
Negotiations began with C in January 2018, which included carrying out certain repairs to both the farmhouse and some of the farm buildings prior to the tenancy.
C’s tenancy began on 1 April 2018, and he commenced farming the land (livestock) at that time. Due to a leak in the property at the beginning of March 2018 and the resulting repairs required, he was unable to move in on 1 April 2018 (an extension to the lease was agreed).

Would the death of the tenant render the estate unable to claim APR?

Has anyone come across this situation before? Would be grateful for any views on this.

Laura Selby
Harding Evans

2

The big problem with agricultural property relief is that the test of occupation for agricultural purposes must be satisfied throughout the 2 or 7 year period up to the date of death. Any non-agricultural use during part of that period ends entitlement to the relief. This particularly pernicious where someone who has farmed land all their life becomes ill in the final part of his/her life and cannot continue to work thereby losing relief.

In this case, the tenants will be occupiers whilst the tenancies were in place. After tenant A died, did any farming take place in the period up to October 2017? If not the executors will struggle to get relief as the widow would not be occupying for agricultural purposes.

As to the period from October 2017 to April 2018, the property owners will be the occupiers in this period. One can argue that they occupied for agricultural purposes if they were actively seeking a new agricultural tenant and were keeping the land/buildings in suitable state for future agricultural use.

Malcolm Gunn
M B Gunn & Co Ltd

3

Many thanks for your reply. Some uncertainty regarding the activities of the widow, she certainly maintained it. If the landlord had no choice but to allow the widow to stay for a period of time (I’m not sure whether landlord did or did not have choice), it would seem rather unreasonable.

Let’s hope widow occupied for agricultural purposes! Thank you.