Tim Ryan of the IFAC - being a co-operative society its means they are owned by their members - and always have them in mind
Tim Ryan of IFAC Accountants explains why now may be the perfect time for farmers to take on new projects
Changing Farm Structures
One of the major decisions which can face farmers is whether to change their farm structure. There are many aspects from the Department of Agriculture, Revenue and legal implications that should be reviewed before a decision is made
Registered Farm Partnerships
If you have decided to enter a partnership, you should reach out to your accountant and solicitor for advice. They can then examine the proposed structure and confirm that it makes sense not only financially, but from a succession and legal point of view too. The next step is to deal with the Department of Agriculture as they have templates and sample documents to assist farmers which are available on the DAFM website.
Registered or unregistered partnerships are virtually the same from a legal and taxation point of view. The main difference between them is that Department of Agriculture benefits are available to registered partnerships.
What benefits can I expect from a Registered Partnership?
*Extra grants available to all partners—double TAMSII
*Allows more than one herd number in the entity
*Sorts all issues with herd numbers and BPS - owner of BPS does NOT transfer entitlements to other partners (unless they wish to)
*Useful as a succession planning tool to bring Young Farmers into business
*Tax benefits – New stock relief 50%
Beware the Joint Herd Number Issue – Am I in a Partnership?
Recently, some farmers have created “Joint Herd Number” structures in order to qualify for the National Reserve and Young Farmers Scheme without seeking either legal or taxation guidance. This can cause issues down the line as the question arises in individual cases as to whether a partnership has been created. Potential problems include:
*Whether the structure grants immediate, unintended legal ownership rights to the underlying farming assets of the enterprise, to the new joint owner.
*Whether the structure renders the terms of existing Wills which do not reflect the existence of the partnership open to legal challenge as a consequence of not referring specifically to the partnership.
*Whether the structure creates unplanned and unintended Income Tax, Capital Gains Tax, Capital Acquisitions Tax, or Stamp Duty bills.
Ifac Do’s & Don’ts
*Do NOT transfer your herd number or BPS to a registered partnership before deciding with your accountant/solicitor who exactly is in the partnership.
*Do NOT transfer your herd number to a registered partnership or joint names if you have applied and not been granted approval for a TAMS grant or GLAS. You must wait until approval has been granted before moving herd number.
*BPS must always be transferred to the new entity before 15 May each year
*Be aware of tax/legal issues of moving a herd number to joint names without setting up either a registered or unregistered partnership.
A properly planned partnership structure, such as a Registered or Unregistered Farm Partnership, can assist in a number of ways, including with farm transfers and succession. A partnership can also enhance profitability, improve work-life balance, reduce Income Tax, secure 50% Stock Relief and a potential double ceiling for the new TAMS II Capital Grant.
However, before deciding to enter into a partnership, always seek professional advice.