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MARTIN EDHOUSE and SIMON PRIOR consider the correct tax treatment of a woodlands’ grant that HMRC believed to be fully taxable
KEY POINTS
- An explanation of the farm woodland premium scheme.
- Subsequent occupiers may also receive the grant.
- The tax exemption for woodlands.
- A look at HMRC’s instructions.
- The tax treatment of the grant in the successor’s hands.
When someone receives a grant a subsidy or a compensation payment it is not always immediately clear what the tax consequences will be.
Deciding the appropriate treatment of any particular payment will usually require a detailed analysis of the reasons behind the payment and the nature of the ‘hole’ that the payment is intended to fill.
The general principle is that the tax treatment of any receipt will follow that of the supplanted matter. So where a payment is intended to stand in the place of business profits it will be taxed as if it...
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