Chapter IHTM24074
| Published date | 20 March 2016 |
| Record Number | IHTM24074 |
| Court | HM Revenue & Customs |
| Issuer | HM Revenue & Customs |
It is important to have an understanding of the difference between a lease (that is a tenancy) and a licence under general law so that you know what you are dealing with in any particular case.
The requirements for a lease are
- exclusive possession of a defined area of land,
- for a fixed period (or series of periods) of time,
- with the intention to create an estate in land - that is an interest in the land itself which can be assigned or sold.
Rent will usually be paid but it is not an essential requirement. Exclusive possession for a term under an enforceable agreement (for example by deed) will be sufficient.
However, it is unlikely in practice that a periodic tenancy would be granted without provision for payment of rent and the absence of such provision may well suggest a licence rather than a tenancy.
A licence is simply a permission to use land. It allows someone access to the land of another for an agreed purpose. It is an authority that justifies what would otherwise be a trespass. It does not confer any interest in land.
If there is no exclusive possession then the arrangement cannot be a lease and must be a licence.
The general rule is that the Court will look at the substance of the agreement rather than the form in which it is expressed. Street v Mountford [1985] AC 809 gives a good exposition of the law in this area.
Other arrangements that may be encountered which are not grazing licences include Profits a prendre. This is an entirely different legal mechanism being an incorporeal heriditament, a right to take something that is part of the land and capable of being sold from another person’s land - in this case a Right of Herbage whether for a fixed or periodic term. Other arrangements are taking in livestock under arrangements known as tack or agistment. These comprise the taking in of livestock at a rate of so much money per head.
Grazing licences can be both verbal and written agreements. The rights and responsibilities under a grazing licence agreement vary from where the grazier takes responsibility for all the farming operations, to arrangements whereby the landowner carries out husbandry operations to grow the grass crop and the grazier brings on his livestock to the land to eat the grass crop off. It is important to identify where these...
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