Golf Irons to Ploughshares: Golf course to revert to farmland

Remember the craze for converting farmland into golf courses in the 1980’s?  Two golf courses sold in the last few weeks offer an up-to-date perspective.  One was sold for conversion back to farmland, and the other as a going concern.  But at £5,000 and £10,000 per acre, which was which?

The Norfolk Golf and Country Club Golf and Leisure Complex, Reymerston, Norfolk was on the market for £1.6 million.  This course opened in 1995 on 159 acres, offering an 18 hole Par 72 course.  That’s about £10,000/acre.

The Mollington Grange course, near Chester, was also sold for a figure ‘in excess of’ £795,000.  This course opened in 1999 on 176 acres, offering an 18 hole Par 73 course.  That’s about £4,500/acre, or allowing for the estate agent’s hyperbole ‘in excess of’, probably in the region of £5,000/acre.

Both courses included club houses and other buildings; both were largely on former Grade 3 farmland (broadly free-draining sandy-loamy soils in each case).

Mollington Grange, at £5,000/acre was sold as the going concern, but Reymerston at £10,000/acre is destined to revert to farmland.  Food for thought and more less than 20 years on from their loss from agriculture in the first place.  Here today, gone tomorrow.

Both sales were handled by Savills:

Mollington Grange announcement

Norfolk Golf and Country Club announcement

 

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Farmhouses and Inheritance Tax: Elephant Test holds good for Golding

Savills Rural have circulated details of their success in Golding v HMRC.  Mr Golding, an elderly smallholder, farmed 16 acres near Lichfield.  Towards the end of his life he mainly grew food for his own consumption, although he continued to make modest profits from year to year.  He died in 2007 and the executors of his estate claimed Agricultural Property Relief on the smallholding as a way to reduce the Inheritance Tax Bill on the estate.  But the taxman did not agree.

The taxman did not dispute the eligibility of the land and buildings for the relief, but denied the claim for the house.  This was a small three bedroomed house in poor condition.  Their original argument was that the small house was not of ‘character appropriate’ to the smallholding.  Later on this was extended to a claim that it was not even a ‘farmhouse’.  The technicalities here are that a ‘farmhouse’ must be of ‘character appropriate’ to qualify for Agricultural Property Relief.  It must also be occupied ‘ancillary’ to agricultural land, and there is a minimum period of ownership as well (two years in a case like this).  The latter points were not however, in dispute in this case so the argument revolved around whether the dwelling was of ‘character appropriate’ to the 16 acres of land.

It seems from Savills’ description of the case that the main argument by the taxman was based on the limited financial viability of the holding.  Earlier cases however – notably Antrobus in which Savills’ Clive Beer and mfg solicitors also acted for the claimant – confirmed the broader basis of a claim for relief on a farmhouse.  A wide range of factors must be considered, including the size of the holding in relation to the house, cropping and stocking aspects, history of the holding and the so-called ‘elephant test’ – you know a farmhouse when you see it.  The Tax Tribunal seems to have accepted the broader argument.

The plight of the elderly farmer has been a growing concern in recent cases, and this case looks as if it will be notable for the Tribunal’s acknowledgement that as farmers grow older and their output drops, the reduced scale of the farm business does not on its own exclude Agricultural Property Relief.

It’s not time to party yet, as HMRC have until mid-July to appeal but the details of this case will be required reading once they become available on the Tax Tribunal’s website, in particular for the Tribunal’s detailed reasoning, the details of the case, the evidence and how the Tribunal dealt with it.