SIMPLIFIED TAX

Back in 1992, I chaired a working group of CLA members, allied professional advisers and redoubtable head of taxation Adrian Baird, to look at the unsatisfactory way in which rural businesses were taxed as they diversifi ed away from their predominantly agricultural income.

Coincidentally, the CLA’s incoming president Mark Tufnell was working with me at Smith & Williamson at the time, and was intimately involved in the deliberations. It is a small world.

Our group reported in November 1992 and proposed that rural businesses should, in future, be considered as a single unit for taxation purposes, giving birth to the concept of the Rural Business Unit (RBU). Our report was presented to the government, and I know it was seriously considered by both Defra and the Treasury, as I was so informed by the then minister of agriculture John Selwyn Gummer – my own member of Parliament at the time.

Indeed, I understand that the possibility of introducing the RBU was seriously considered in government right up to the 1997 election. However, the immediate loss of some tax was unfortunately considered more important than encouraging rural landowners to look at their businesses in a simpler, more effi cient and holistic way, without the anomaly of different tax regimes applying to the various sources of income.

In 1997, the incoming Labour government focused on what it considered to be more important rural issues, some of which resulted in the passing of a number of acts that affected life in the countryside. Th e taxation of rural landowners, and the concept of the RBU, was clearly not top of that government’s rural agenda, and pressing for its introduction was no longer a priority for the CLA.

However, the wheel has come full circle. Although I have long since retired as chairman of the CLA’s taxation committee, CLA offi cers and staff have kept the concept of the RBU alive as a desirable reform to press when the time is right. In February 2020, the CLA’s Budget Submission once again championed the concept of the RBU as a reform that would simplify the tax rules for diversifi ed rural businesses.

Of course, life has been far from normal since March 2020 and, as we know, it has been very diffi cult to hold meetings and round tables in which new concepts can be discussed with offi cials. Nevertheless, the CLA is championing the RBU as a key element of its Rural Powerhouse campaign.

Now is the time for government to look at the concept again in order to assist rural landowners as they face the profound changes that are consequent on the UK’s withdrawal from the EU, and thus from the Common Agricultural Policy. Indeed, looking at my own business, I can see that we are facing changes that are as challenging as those we faced when I fi rst became involved more than 50 years ago.

I wish the CLA success as the concept of the Rural Business Unit heads towards its 19th birthday.

FIND OUT MORE

For more information on the CLA’s Rural Business Unit, visit cla.org.uk/

library/rural-business-unit

Simplifi ed tax Sir Michael Bunbury brie y explores the 19-year history of the CLA’s Rural Business Unit, and why it is an important policy concept for the future