New queries, issue 4569

Salad days

Tax treatment of split between farm business and buildings.

A local farmer carries on a salad growing business on 50 acres of freehold land. The land is open field but several acres have glasshouses and farm buildings.

Some years ago the ‘trade’ was transferred to a company. The shareholders of the company and the owners of the land are the same people.

With a view to diversifying and assisting growth the directors want to construct more buildings to let out as units to third parties and some occupied by the farm itself for storing tractors.

The plan is to spend £100 000 (excluding VAT) to construct a new property with the idea of further buildings in future. The farming business is VAT-registered. There is something of a conundrum as to who pays for and owns the new buildings. It is possible that monies can...