SPS and CAP

    Licences

    This year, more than any before, there is confusion over what is an acceptable form of land occupation to claim the Single Payment Scheme subsidy where land is used seasonally for growing specialist vegetable crops.  It has always been the case that the most effective and secure means of land occupation is a tenancy with the lease of entitlement to the tenant.  However, this may not be possible where the land supplier is a tenant or where the latest date to register with the RPA for transfer of entitlements (2 April) is passed

    There is disagreement, even between lawyers, on the safest approach but it is sensible to ensure,  wherever the agreement is obtained from, that the supplier will stand by the arrangement if it is put under scrutiny. In general, older agreements will not be fully secure and should be revised.  Where a licence is used it is important that agreement conditions are carried out.  A licence will not be effective where the occupier is in reality a tenant.

    Where a tenancy is used ensure that the cross compliance provisions are adequately covered.

    Splitting Businesses

    In order to qualify for subsidy under the current CAP proposals it is necessary to have activated entitlements in 2011, or have the right transferred, or be able to claim from the National Reserve (the rules are not yet defined).

    One of the key concerns is the possible eligibility for entitlements under the reform proposals where a business is split post 2011.  More care than usual is needed since there is at least a possibility that one of the parties might lose their 2011 right.   To reduce this risk it needs to be made clear that the two businesses have resulted from a scission and that it is not a transfer of some of the entitlements to someone who would not be valid as a new entrant and who might not qualify from the National Reserve.

    Golden Ticket

    There has been a lot in the press about the value of the 2011 ‘right to subsidy’ and the transfer value. As the proposals stand ’the right to subsidy/entitlement eligibility’ can only be transferred to a new ‘post 2011’ occupier of land occupied by the 2011 claimant.  It is of no value to an existing claimant taking on the land or to someone who was eligible from the national reserve. The highest likely value is the capital value of purchasing entitlements at say 1.5 times the income value. Post establishment (in 2014/15)There are likely to eventually be more entitlements than land forcing down the capital value. In some locations and for a very few outgoing 2011 claimants there might be a little extra value in the 2011 right.

    Key Points

    • Care with seasonal land occupation agreements
    • Care with business restructuring to ensure no loss of entitlements.
     
     

    Key contacts

    Andrew Wraith

    Andrew Wraith

    Director
    Food & Farming

    Savills Lincoln

    +44 (0) 1522 508 973

    +44 (0) 1522 508 973

     

    Ian Bailey

    Ian Bailey

    Director
    Rural Research

    Savills Margaret Street

    +44 (0) 207 299 3099

    +44 (0) 207 299 3099