25 July 2016

Complex structures are sometimes used to protect interests in the rural sector. Where these involve subsidies, the principle of "artificiality" (an EU law concept) can invalidate arrangements which appear to have the preservation or obtaining of subsidies as their primary justification. The King family owned a farm in Lincolnshire, which they eventually sold with a view to purchasing a new farm in Scotland. They took three years to purchase their new farm and in order to preserve their entitlements they entered into a number of short term arrangements in which they let and farmed land around 15 May each year – the critical date for the entitlements legislation. The short term arrangements included a lease for 10 days and a short term contract faming agreement.

DEFRA argued that the entitlements had been lost as the agreements had been contrary to the objective of the legislation and infringed the "use it or lose it" principle, which states that if a payment is not activated for two years the entitlement is lost. Mr Justice Cranston disagreed and said that although these arrangements were "artificial" they did not prevent the Kings from retaining their entitlements. The judge did, however, warn that such arrangements would not always work, particularly for entitlement holders who had no "agricultural base".


Key contact

Kevin Kennedy

Kevin Kennedy Partner

  • Estates and Land
  • Private Wealth
  • Agricultural Disputes

Subscribe to news and insight

Burges Salmon careers

We work hard to make sure Burges Salmon is a great place to work.
Find out more