The Central Association of Agricultural Valuers (CAAV) has strongly opposed a proposal that would restrict Agricultural Property Relief (APR) on tenanted land to land let for at least eight years.

 Responding to HM Treasury and HMRC's Consultation on Taxation of Environmental Land Management and Ecosystems Service Markets/Agricultural Property Relief for Land in Environmental Use and Let Land, CAAV Secretary and Adviser Jeremy Moody explains why.

 "We see it as inconsistent with the Government's response to the Rock Review, which seeks a flexible and diverse let sector.

 "We do not believe that it is realistic to expect this proposal to come anywhere near achieving its objective of increasing the average length of granted tenancies to eight years.

 "Instead, our analysis, working from the data in our surveys, suggests that it would do considerable damage to the let sector, coming at a time when an expanding and flexible let sector, offering opportunities to better businesses, is key to answering farming's serious productivity challenge, now the restriction of area payments is removed.

 "We foresee it creating a polarised outcome, with, at best, only marginal and temporary gains in the area of such eight-year lettings - with currently longer ones shortening to that - but much let land being let for shorter terms and further land ceasing to be re-let."

 The arguments put for the proposal overlook the variety of current and potential private sector landowners, he says. "The stereotypical let farm with a house and buildings accounts for less than 10% of lettings. Most lettings are of bare land by owners who prize flexibility."

 With modelling based on data in the CAAV's annual Agricultural Land Occupation Surveys, it believes the proposal would be seriously damaging to the let sector and UK agriculture resulting in:

• No new land attracted to letting
• The early loss of some 200,000ha of land from the let sector in England alone
• A long-term reduction in size of the let sector from around a third of England's farmed land to around a fifth
• Similar results in Wales
• Serious reductions in the use of Short Limited Duration Tenancies in Scotland with little gain in the longer Modern Limited Duration Tenancies and other land lost from letting
• The end of hopes of having a tenanted sector in Northern Ireland.

"This does nothing for existing tenancies, reduces opportunities for would-be tenants, while many landowners could see fiscal advantage in taking environmental options themselves rather than letting land out," says Mr Moody. "While changing tax rules can be expected to change behaviour, this outcome is the opposite of what its advocates want, but we cannot see how it can do what they want."

 Responding to another area of the consultation, 'The Taxation of Environment Transactions and Assets', Mr Moody says there are areas of uncertainty in applying taxation to the developing and very varied world of environmental transactions, holding them back. "With that background, CAAV urges round table discussions to develop shared analysis of common situations which normal accounting and taxation principles can be applied to."

 On another consultation proposal, 'Extending APR to Land in Serious Environmental Commitments' Mr Moody says: "With the background public policy objectives, we endorse the proposal in principle. We seek fiscal neutrality in these land use choices and a seamless regime for agriculture and environmental land uses, so these decisions are taken for business and personal reasons, not deterred by the risk of a 40% tax charge on land values.

 "Overall, we commend the virtue of keeping the taxation system as simple as reasonably possible so that it is understood by those it affects and does not distort decisions. All too often, complexity defeats its goal by not being understood."