Following recent clarification from the Scottish Government, the Scottish Agricultural Arbiters and Valuers Association (SAAVA) has issued guidance to deal with entitlements transfers.
The membership organisation reacted to concerns about the complication and uncertainty of transferring entitlements for 2016 BPS claims: particularly the operation of the 50% siphon and when it applies.
Alice De Soer of the Central Association of Agricultural Valuers (CAAV) commented, “All BPS entitlements may be transferred (sold or leased) without land, but the Scottish Government decided some time ago that these transfers will initially have a 50% siphon applied to their payment value. This means that where entitlements are transferred without a corresponding area of eligible land, they will have their value halved in the relevant Scheme year.
“What has not been clear until now is what effect that would have on the future payment value of those entitlements. The Scottish Government has clarified this and stated that once the siphon has been applied in the Scheme year when the entitlements are transferred without land, the payment value of those entitlements should then be phased in annual steps to the 2019 flat rate that applies to all other entitlements.
“This means that by 2019, the payment value of the entitlements transferred without land should have reached the same payment value as other entitlements in the relevant Payment Region.”
Clarifying that the transfer of land only takes place where it is sold or leased, not at the end of a tenancy, SAAVA President, James Dick said: “This is a critical point, as where a tenant submitted the 2015 SAF and will be allocated the BPS entitlements, the end of his tenancy will signify a siphon for payments, whether to a successor tenant, or to his landlord. Therefore it would seem that an incoming tenant would be subject to a significant financial disadvantage over those around him who have not suffered a siphon. However the fact that he will reach the flat rate in 2019, means that it will have less of a financial impact on his business than had at first been thought.”
The Scottish Government has confirmed that even though a land sale may take place before entitlements are allocated and transferable next spring, this should still be viewed as a ‘with land’ transfer of the entitlements.
James Dick concluded that “While there will be further questions, we now have some answers which will be of practical assistance to the industry in the implications of transferring land and entitlements. SAAVA & CAAV will continue to work with the Scottish Government to help Scotland’s hard-pressed farmers.”