Northern Ireland Agriculture Minister, Michelle O’Neill, today provided an update on developments regarding the definition of an active farmer under the new Common Agricultural Policy (CAP) Reform and its potential implications from 2015.
In a statement the Minister said: “My position during the CAP Reform negotiations has been that direct payments, which are intended as an income support for farmers, should in future go to those who are actively farming the land. This has also been the position of the European Commission and its auditors and, therefore, it is important that there is clarity in the EU regulations going forward, particularly in relation to land let in conacre.
“I can now report that the draft Delegated Act implementing the CAP Reform agreement contains a provision that in 2015, entitlements to be issued under the new support regime must be allocated to the person enjoying the decision making power, the benefits and the financial risks in relation to agricultural activity being carried out on the land for which an allocation is requested.
“Therefore, provided the Delegated Act is adopted in a few months time with this wording, it will only be in exceptional circumstances that in 2015, landowners renting out land in conacre will be able to establish entitlements on that land. The expectation, therefore, is that entitlements will be established by the person who is actively farming conacre land. This, of course, also depends upon a decision to abolish all existing single farm payment entitlements at the end of 2014 and to allocate new entitlements in 2015 as part of CAP Reform implementation. That is the approach I have proposed in the Pillar 1 CAP consultation which closed on 17 January, but I want to consider carefully the consultation responses before a decision on this matter is made.
“However, even if existing SFP entitlements were retained, landowners renting out land in conacre will still have to comply with all of the eligibility requirements set out in the new support regime, including those I have just outlined.”
The Minister continued: “Existing rules will continue to apply in 2014 as CAP Reform will not be implemented until 2015. However, it is open to landowners, if they wish, to transfer permanently, for example by sale, their SFP entitlements to the person renting their conacre land by no later than 2 April 2014. This could result in the value of the transferred SFP entitlements being included in the amount used to calculate the value of the new entitlements to be allocated to the conacre licensee under CAP Reform in 2015 (if I decide that new entitlements should be allocated). I would emphasise that for this to be effective, the SFP entitlements would have to be definitively transferred and not simply leased. This is an option that landowners may wish to consider and discuss with those renting their land, but bearing in mind that the Delegated Act and policy decisions have not yet been finalised. It would, of course, mean that the landowner would not be able to claim SFP against these transferred entitlements in 2014.”
The Minister added: “I am aware that there has been some concern about the implications of not being allocated entitlements on liability for inheritance tax on agricultural land. I would first of all emphasise that it is essential that individuals seek professional advice on taxation matters. However, I am not aware of any case to date where a decision on inheritance tax liability has depended on who claimed Single Farm Payment. I am also aware of a letter received in December 2009 by my predecessor, Michelle Gildernew MP, where the British Treasury stated that land owned by the deceased throughout the seven years immediately prior to death would be eligible for Agricultural Property Relief provided that throughout that period, it was occupied for the purposes of agriculture by either the owner or another (such as a tenant).”
The Minister concluded: “The definitive outcome on this issue depends upon the draft Delegated Act being adopted and various CAP Reform implementation decisions which I have yet to make. However, the direction of travel is now clear, which is that the allocation of entitlements, and in turn direct payments, should go only to those who can demonstrate that they satisfy the requirement of enjoying the decision making power, benefits and financial risks in relation to the agricultural activity being undertaken on the relevant land. The clear intention of the European Commission.”