1. DOES THE NEW CAP FIT?
A CASE STUDY
James Dinwiddy, Birketts LLP
25 March 2014
2. Page 2
• Joe and Ben Farmer are co-owners of 800 hectares. They farm 700 hectares
in hand and let 97 hectares to a neighbour called Mrs Sprout (due for
renewal). The remaining 3 hectares are let to Ms Toggi.
• Joe and Ben are also buying another 300 hectares from a neighbour.
• Joe and Ben grow spring and winter wheat, barley, rape and beans.
• Joe and Ben have an old written partnership agreement but Ben is thinking of
retiring and Joe’s son Harry (also a farmer) may join the business.
• Harry has a small holding of 20 hectares but is keen to do more. He turned
33 on 11 February 2014 and may want to join his father in the partnership.
• Angular Water own 70 hectares of grassland surrounding a nearby reservoir
– currently grazed under a grazing licence.
3. Page 3
Transfer of entitlements when Joe and Ben are buying the additional land.
• As you were! – sale and purchase agreement should:
• allow for the transfer of the specified amount of entitlements;
• ensure cross compliance;
• cover submission of the RLE1 form;
• contain indemnities for any loss or reduction in the amount of entitlements
• Degressivity – reduction in basic payment
4. Page 4
Mrs Sprout’s FBT
• include clause in renewal FBT allowing tenant to use the entitlements
whilst in occupation and to transfer them back to the landlord at the
end of the term.
5. Page 5
Ms Toggi’s FBT
• Ms Toggi only rents 3 ha which is below the minimum eligible area
threshold of 5 ha.
• will therefore no longer be able to claim.
• sell entitlement before end 19 October 2014
6. Page 6
• Joe and Ben’s in hand land – must grow three different crops.
This could be the wheat, rape and beans.
• They will need to have 5% of their land under EFA.
• Cropping licence v FBT
7. Page 7
• Harry’s Land – only needs to grow 2 crops because within the 10-30
8. Page 8
Young Farmers Scheme and business restructuring
• Harry could qualify as a young farmer and obtain the top-up payment on
the land he owns.
• What if he became a partner in his father and uncle’s business? –
probably not qualify as not head of holding;
• any split of the business would be heavily scrutinised by the RPA.
9. Page 9
Angular Water – water works on negative list
• Sell / let