Why are Farmers Complaining

MK62

FIREDreamer said:

Andy_L said:

artyboy said:

Given that farms are a business, and often quite a large one, is there a reason why their assets are not typically owned through limited companies (or another suitable legal entity structure) that the farmer and any relevant spouse/offspring could be directors of?

I admit I'm no expert in this field, but it seems to be the fact that the land etc is directly owned by the farmer as a personal asset that's what will cause IHT liability...

The farmer would still be the owner of the Ltd company so it would still be an asset in the estate.

Sell the shares to his successor for £1.

Unfortunately HMRC closed that avenue off long ago.........

Albermarle

movilogo said:

IHT rates around the world

https://en.wikipedia.org/wiki/List_of_countries_by_inheritance_tax_rates

Many countries don't have it. UK has one of the highest rates - yet we have one of the widest rich poor gap in UK among developed countries. 

In USA there is no federal IHT, but some states have it. 

I am against IHT in principle. 

If farmers demand to abolish IHT altogether they'd get full public support.

The way house price is going up, nearly everyone within 100 miles of London will end up paying IHT in near future.

Full support, until the lost tax was reclaimed by increasing other taxes. Then everybody would be against that as well.

Pat38493

Doesn't HMRC have blanket legislation to clamp down on tax avoidance schemes that they could have used here?  e.g. if some people are buying farms in order to avoid IHT (and then in some cases boasting about it in public), cannot HMRC basically just declare that their property is no longer a farm if it was obviously purchased specifically to avoid IHT.

I've seen before that HMRC has some kind of rules where they can deem certain activities as not allowed if they are clearly designed to avoid the spirit of tax rules.

Also - could they not just have made a rule along the lines that the farm has to have been handed down through several generations of defined eligible family, and is being handed down again in the same way.  This is not the same as a farm that was purchased in recent years by someone who was never a farmer in the past.

As I'm sure has been stated on this thread before, IHT is generally the most disliked tax even though hardly anybody ends up paying it.  It's also arguably a very progressive tax as it interferes with the ability of the wealthy to give heirs a head start in life, regardless of their underlying abilities.

henry24

Farmers have enough things to worry about and having the family farm taken away from the family to pay a tax is wrong, the family should only pay the tax if they choose to sell up

Andy_L

FIREDreamer said:

Andy_L said:

artyboy said:

Given that farms are a business, and often quite a large one, is there a reason why their assets are not typically owned through limited companies (or another suitable legal entity structure) that the farmer and any relevant spouse/offspring could be directors of?

I admit I'm no expert in this field, but it seems to be the fact that the land etc is directly owned by the farmer as a personal asset that's what will cause IHT liability...

The farmer would still be the owner of the Ltd company so it would still be an asset in the estate.

Sell the shares to his successor for £1.

"A gift can also include any money you lose when you sell something for less than it’s worth. For example, if you sell your house to your child for less than its market value, the difference in value counts as a gift."

https://www.gov.uk/inheritance-tax/gifts

movilogo

There is a theory called Laffer Curve in economics which basically says if taxes are raised too high then treasury earns less revenue because people will avoid ways not to pay those taxes.

Tax frauds are more common that people think. Many people do not associate underpaying tax same as stealing because they think it is the government who is stealing from their pocket. 

If tax rules are made too complex (they already are) then HMRC needs to spend lot of effort (time + resource, which means tax payers' money) to figure out if people are not paying enough taxes.

Corporation/business taxes have so many exceptions and loopholes that it is very difficult to police them. Big 4 accounting firms + many others make a fortune by leveraging these loopholes for their billionaire clients. 

Lower taxes may not be a vote winner but actually lower tax rate can increase overall tax revenue for treasury.

Most tax issues end up being emotional arguments because political parties try to divide society by labelling people like rich = bad, poor = good and so on.

Cus

movilogo said:

There is a theory called Laffer Curve in economics which basically says if taxes are raised too high then treasury earns less revenue because people will avoid ways not to pay those taxes.

Tax frauds are more common that people think. Many people do not associate underpaying tax same as stealing because they think it is the government who is stealing from their pocket. 

If tax rules are made too complex (they already are) then HMRC needs to spend lot of effort (time + resource, which means tax payers' money) to figure out if people are not paying enough taxes.

Corporation/business taxes have so many exceptions and loopholes that it is very difficult to police them. Big 4 accounting firms + many others make a fortune by leveraging these loopholes for their billionaire clients. 

Lower taxes may not be a vote winner but actually lower tax rate can increase overall tax revenue for treasury.

Most tax issues end up being emotional arguments because political parties try to divide society by labelling people like rich = bad, poor = good and so on.

I wouldn't be surprised if the amount of regular income tax etc paid by the employees of these accounting firms, plus the corporation tax etc of these firms, plus the beneficiaries of the tax saving also spending etc equates to the amount of tax that they are saving away from the government in the first place. 
Keeps people in jobs.

leosayer

Pat38493 said:

Doesn't HMRC have blanket legislation to clamp down on tax avoidance schemes that they could have used here?  e.g. if some people are buying farms in order to avoid IHT (and then in some cases boasting about it in public), cannot HMRC basically just declare that their property is no longer a farm if it was obviously purchased specifically to avoid IHT.

I've seen before that HMRC has some kind of rules where they can deem certain activities as not allowed if they are clearly designed to avoid the spirit of tax rules.

Also - could they not just have made a rule along the lines that the farm has to have been handed down through several generations of defined eligible family, and is being handed down again in the same way.  This is not the same as a farm that was purchased in recent years by someone who was never a farmer in the past.

As I'm sure has been stated on this thread before, IHT is generally the most disliked tax even though hardly anybody ends up paying it.  It's also arguably a very progressive tax as it interferes with the ability of the wealthy to give heirs a head start in life, regardless of their underlying abilities.

There is no 'spirit of the tax rules' as such but GAAR comes close to doing what you say.

However if someone buys a farm and then continues to operate the farm and maybe benefit from land values increases then it's would be a push to describe this is anything other than a normal transaction.

LHW99

leosayer said:

Pat38493 said:

Doesn't HMRC have blanket legislation to clamp down on tax avoidance schemes that they could have used here?  e.g. if some people are buying farms in order to avoid IHT (and then in some cases boasting about it in public), cannot HMRC basically just declare that their property is no longer a farm if it was obviously purchased specifically to avoid IHT.

I've seen before that HMRC has some kind of rules where they can deem certain activities as not allowed if they are clearly designed to avoid the spirit of tax rules.

Also - could they not just have made a rule along the lines that the farm has to have been handed down through several generations of defined eligible family, and is being handed down again in the same way.  This is not the same as a farm that was purchased in recent years by someone who was never a farmer in the past.

As I'm sure has been stated on this thread before, IHT is generally the most disliked tax even though hardly anybody ends up paying it.  It's also arguably a very progressive tax as it interferes with the ability of the wealthy to give heirs a head start in life, regardless of their underlying abilities.

There is no 'spirit of the tax rules' as such but GAAR comes close to doing what you say.

However if someone buys a farm and then continues to operate the farm and maybe benefit from land values increases then it's would be a push to describe this is anything other than a normal transaction.

The thing here is, they only "benefit" from land value increases if it is sold.

Passing it down to the next generation doesn't access that value, as only the profit from working the land is available. If this land value has to be realised in order to pay the tax, then it is likely that the land may go out of production altogether, which isn't good for our food security.

People may not like going back to mainly having seasonal fruit, vegetables and meat, but that is preferable to finding that climate change, wars etc are significantly reducing everything that can be bought in the supermarkets.

PropertyGuru_Wannabe

Same arguments all over again. This is for many just a tax dodge. Just let the rich get richer and poor get poorer without the rich paying their fair share of taxes. Only the rich knows the tax dodges. It’s always been that way and will always stay that way. Why? Because we’re all greedy!