Don’t give the taxman the last laugh through poor tax planning for on-farm and estate music festivals and other events.
With the summer music festival season in full swing, chartered accountant Saffery Champness is warning that there are many potential tax pitfalls that landowners and farmers will face should they enter into an arrangement to stage an event on their land that provides an additional income stream to the business.
Increasingly farms and estates are diversifying into public events of varying degrees of scale, from major spectacles with 200,000 through the gate to the more modest with possibly just a few hundred attending.
Mike Harrison, partner in the landed estates and rural business group of the accountant, said: “It is not just the major events where the rules apply and even those putting on much smaller concerts, fairs and similar need to consider their tax implications and liabilities.
“While landowners and farm businesses will appreciate the additional income such activities provide, they should be sure to be thorough in assessing the tax implications.”
Some important points for any farmer or landowner to consider before setting up or staging an event: n What is the landowner’s involvement – is it purely a rent received for the use of the land by a third party?
- Should VAT be charged on that use?
- Will VAT be recoverable on any related costs incurred with the event?
- How will income be taxed in the hands of the recipient?
- Does the occupation of land for an event have an impact on agricultural property that might otherwise be available for Inheritance Tax purposes?
Mr Harrison said: “Provided certain criteria are met, the tax position for the landowner can be much improved if they run the event themselves or enter into a joint venture with the organisers.
“Whatever the context, an early appraisal with regard to the tax implications for such projects will ensure it is not the taxman who has the final laugh.”
For details, call 0161 200 8383.