Savills was initially instructed to advise on a farm rent review. Following discussions with the client we identified a number of opportunities for the landlord to restructure their arrangements providing considerable tax benefits.
Following a detailed appraisal of the existing tenancy and meeting with the farming tenant, recommendations and a strategy were put forward for a restructuring arrangement whereby the tenancy agreement was replaced with a contract farming arrangement. This involved significant negotiations with the tenant who became the contract farming operator, effectively farming on behalf of the landowner who took a greater risk in the farming operation.
The contract farming operation provides the client with an opportunity to benefit from relief from Inheritance Tax with a potential estimated saving of £2 million as well as greater control in the way the farm is managed.