Where two or more farmers or landowners consider collaborating over development proposals to increase the size of prospect that they can bring forward, then a land pooling bare trust arrangement may provide a suitable and tax efficient solution.

David Chismon, partner of Saffery Champness said: "In certain circumstances it may be beneficial for two farmers to collaborate over their respective development plans as an increased area for development may produce a better result in terms of planning as well as other economies of scale rather than developing small parcels of land independently of one another.

"However, where such an arrangement is not set up and managed correctly double taxation can result such as in a phased development when the owner of Area A sells before the owner of Area B. If however their agreement, in very simple terms, is to share the combined proceeds then A sells and gives a proportion of the proceeds to B, and when B sells he does likewise by way of an equalization agreement.

"The owner of area A however would usually be taxed under Capital Gains Tax rules on all proceeds received for disposal of his land and gets no tax deduction on his payment to the owner of area B. The owner of area B is also taxed on his receipt from A, with the same applying to B on his land disposal when he sells."

However, under a land pooling bare trust arrangement both agree to own the land jointly through a bare trust in an agreed proportion and valuation is crucial. Under such an arrangement when any part of the land is sold then they both share the proceeds in proportion, so they are only ever taxed once with regard to each disposal.

Mr Chismon said: "The trust arrangement needs to be very carefully drawn up, but such a measure can minimise exposure to Capital Gains Tax and should be possible to create without a charge to Stamp Duty Land Tax.