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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Other issues: Valuing milk quotas

| Status of deceased/transferor | Action required | || | 1. Sole farmer, farming own land or land of which he was life tenant | You should ask the taxpayer for a statement or certificate from the Rural Payments Agency,
Milk Quotas Section,
PO Box 277,
EX5 1DB. * You should show the name of the producer, and * the amount of the quota registered.If the land and farming business are * wholly taxable, or * taxable to the same extentyou should attach the certificate to the reference to the DV.The DV will report a combined value for the land and MQ unless asked otherwise. He should not be so asked unless you require separate values - see below.If the land and farming business are taxable in differing proportions (for example, because the business devolves on the children but the land is spouse or civil partner exempt (IHTM11032)) your request as above should ask the DV to value the land and MQ together, and apportion the combined value between the two assets. | | 1. Sole agricultural tenant | On a death on or after 25 September 1986, you should ask whether the estate has a right to compensation under s.13 and Sch 1 Agricultural Act 1986 (in Scotland, s.14 and Sch 2 of the same act)Any such sums are * treated as an asset of the business for business relief; and * chargeable to IHT - subject to any available exemption or reliefs.There is no need to involve the DV. | | 1. Sole licensee, that is conducting a business wholly or partly on land occupied under a licence | Refer to Technical at once. | | 1. Member of a partnership engaged in dairy farming | If the land is owned by the partnership you should proceed as at 1.i) aboveIf any of the farming takes place on land not owned by the partnership you should proceed as above and obtain particulars of any tenancy agreement . Once the details are to hand you should refer to Technical. | | 1. Owner or part-owner of land farmed by a company | If the deceased owned shares in the company you should refer to Technical before any other action on MQ is taken. If Technical assume responsibility for the packaging aspect they will also take over the MQ.Otherwise, you should ask SAV by memo whether the company was a dairy producer at the date of death. If it was, and if a valuation of the shares is required for the same occasion of charge, SAV will obtain details about the MQ on your behalf. When you have that information you should send it to the DV together with the reference in respect of the land. SAV may have no information (for example because a valuation of the shares is not required). If this is so you should raise the question at 6, below. | | 1. Owner or part-owner of land farmed by another individual, or a partnership under a tenancy or a licence | You should ask the taxpayer whether there is any MQ referable to the land; if there is you will require a statement as at 1.i. above and should proceed as per that paragraph. If the taxpayer objects to providing that information you should refer the valuation to the DV regardless, explaining the problem. The DV will then establish the facts and agree values as per his instructions.You will also need to ascertain from them * whether the landlord has leased MQ to a producer and if so, * details of the transaction and the amount of quota involved.When the information is to hand you should refer to Technical for advice. | | 1. Beneficial owner of shares in a dairy farming company | If the deceased owned or part-owned land farmed by the company you will need to follow the instructions at 5. above. Otherwise you need do nothing as the value will reflect the MQ value to the company. |