Farm APR & BPR for Private Client Lawyers - Advanced Aspects & Latest IHT Changes

Introduction

Farms are historically lacking in full legal protection and documentation.

The private client lawyer has a big role to play pre and post death to try and ensure all the legal issues are resolved. The cases demonstrating this are endless - Guest, Ham, Davies and Maile.

Updated partnership agreements, wills, together with trading arrangements and dispute protection whilst considering maximum Agricultural Property Relief (‘APR’) and Business Property Relief (‘BPR’) - Merryman and Ham v Bell.

Farm values are high despite Rachel Reeves’ move to 50% APR and BPR after the original £2.5million allowance at 100% plus the new transferable allowance, the IHT liability risk is high.

It is essential for the private client lawyer to think about APR/BPR maximisation and protection with all the integrated legal work they undertake.

The will drafting and partnership agreement drafting need a fully integrated understanding of APR and BPR protection, especially post the Rachel Reeves “U-turn” and complexities that this creates.

There must be a full understanding of what is and what is not agriculture for APR plus what is and what is not trading for BPR - the overload of investments must be considered.

The basic understanding of APR & BPR is important for the advanced aspects of all legal work.

What You Will Learn

This course will cover the following:

• The complexity of farm valuations for probate - the need for early quality instructions and understanding of ownership for APR/BPR calculations. The importance of hope value and full understanding of farm values
• Awaiting working party on farming for the environment - fight hard!
• The partnership agreement - the need for clarity on ownership - partnership and non-partnership for identifying 100% allowability
• APR and BPR as tools to help with farm survival as well as farm development with all associated legal work
• The irony of development projects for farm survival - the risk of hope value for BPR
• The new transferable £2.5million for 100% APR/BPR - clarity of 100% qualification and complex calculations
• The calculation of the IHT liability - the ‘spreadsheet of range’ of liability depending on marginal areas of APR and BPR to be reviewed on all wills
• Lifetime transfers - the recording and the interaction with all legal documentation
• The risk of 0% BPR - areas potentially not qualifying as a trade following the tribunals, e.g. wedding barn, fishing, furnished holiday accommodation. Collection of evidence to prove BPR qualification including legal documentation
• The disputes and potential disputes - concern over negative impact on BPR and APR
• Understanding the legal weaknesses of the farm trading operation - putting right legal documents moving forward, emphasis on historic APR/BPR claims
• Considering marriage breakdown, e.g. the Merryman case - the need to ensure the farm housekeeping is in place, e.g. meetings, signed accounts and good documentation - the increased role of the “farmer’s spouse”
• The power of the private client lawyer - ensuring the other professionals are up to their standard of work based on the problems involved
• The need for planning APR & BPR maximisation - and to ensure it is followed through on probate
• Farm tenancies - maximising 100% APR where possible and consideration of moving to trade for BPR as appropriate for the 50% APR problem
• A good understanding of agricultural tenancy law and tax is essential for all APR/BPR planning
• Complex calculations of impact on core IHT liability of changes to structures and trading method