LANDOWNERS and farmers have been reminded they could face tax implications if they earn income from events on their land.

Saffery Champness, chartered accountants, issued their warning as increasing numbers of farms and estates are diversifying into public events varying from major spectacles with 200,000 through the gate to the more modest with possibly just a few hundred attending.

Mike Harrison, partner in the Landed Estates and Rural Business Group of Saffery Champness, said: "It is not just the major events where the rules apply, and even those putting on much smaller concerts, fairs and similar need to consider their tax implications and liabilities.

"Whilst landowners and farm businesses will appreciate the additional income such activities provide they should be sure to also be thorough in assessing the tax implications. These are often overlooked, particularly in areas such as Inheritance Tax and VAT, and could be both time-consuming and costly further down the line."

Points to be consider before setting up or staging an event includ the landowner’s involvement – is it purely a rent received for the use of the land by a third party? Should VAT be charged on that use? Will VAT be recoverable on any related costs incurred with the event? How will income be taxed in the hands of the recipient? Does the occupation of land for an event (such as a festival) have an impact on agricultural property that might otherwise be available for Inheritance Tax purposes?

Mr Harrison said: "Provided certain criteria are met the tax position for the landowner can be much improved if they run the event themselves or enter into a joint venture with the organisers. Whatever the context, an early appraisal with regard to the tax implications for such projects will ensure that it is not the taxman that has the final encore."