Running a farm or estate shoot for profit: key tax considerations

29 Apr 2016

Road

Many shoots on farms and estates, with just a modest number of shoot days being taken by family and friends, will be run as a private affair and so very much outside the scope of tax and VAT.

But in straitened times, inevitably, there will be thoughts as to whether the shoot might actually be able to make money if placed on a commercial footing.

Points to consider, apart from tax, will include marketing, what to charge, cost control, whether the gamekeeper is able to take on the task – and what extra work this might involve for him.

David Chismon, a partner at Saffery Champness and a member of the firm’s Landed Estates Group considers the tax implications of taking such a course:

VAT

“If the shoot is commercial and income exceeds the registration limit then VAT needs to be considered. If turnover is below the VAT threshold, then running the shoot through a non-registered structure is an option, although VAT on costs where applicable will add to the expense. Alternatively, VAT can be added on to the charge to customers, and recovered on expenses.

“If set up and run correctly, a shoot syndicate where members contribute their share of the costs, would not constitute a business and would therefore be outside the scope of VAT. Care is needed however over how the syndicate is managed.”

Income tax

“If the shoot makes a profit, then those deriving that income will be liable to income tax and National Insurance at the appropriate rate. If losses are made, but the shoot is being operated commercially, then Sideways Loss Relief should be available. Capping rules for this relief would however need to be taken into consideration, depending on the amount of time actively engaged in the shoot business.”

PAYE

“PAYE and Real Time Information requirements can be onerous for hiring in ‘casual’ labour, such as beaters. This should be borne in mind from the outset”

Inheritance tax Relief

“The shooting rights of an in-hand shoot operated commercially ‘with a view to gain’ should qualify for Business Property Relief at 100%. Where the shoot is maintained as a private concern, albeit within a syndicate, the land would only qualify for inheritance tax relief if in agricultural use or for commercial woodland. Using the land for a private shoot alone will not trigger such relief.”

As with any change to the business such as this, professional advice should always be a consideration from the outset.

Click here for more information on our Landed Estates Group.

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