forming a Farm Partnership with Father

jfh

hi all,
Wondering if anyone on here is involved in a farming partnership & working full time? If so would appreciate advice on the pros & cons of such.
I work on farm most evening & weekends & will be taking it over down the line. I’ve got my green cert etc

I would be forming this partnership with my father. Farm is at a stage where it requires investment, would i be able to claim farm losses against my Tax as a PAYE worker?

thanks

delaval

jfh wrote: »

hi all,
Wondering if anyone on here is involved in a farming partnership & working full time? If so would appreciate advice on the pros & cons of such.
I work on farm most evening & weekends & will be taking it over down the line. I’ve got my green cert etc

I would be forming this partnership with my father. Farm is at a stage where it requires investment, would i be able to claim farm losses against my Tax as a PAYE worker?

thanks

I am farming in two partnerships but am at it full time. I wouldn't be qualified to answer tax questions I would suggest talking to your accountant.

The most important thing in any partnership whether with a family member or not is a get out arrangement

jfh

interesting.. that's not something one would automatically think when going into a partnership, so good to get all angles on this.

in fairness, i'm going in with my father, i'm not going into this for financial reasons, the farm just about supports my parents, so i dont see things going bad between us.
the accountant is the way to go, but our guy isn't great, it's something i'd like to change but we've had the same accountant for the last 40 years.

Timmaay

The get out agreement is the most important reason to get an official partnership in my view!

I'm in one with my dad at the minute, to be honest on hindsight I'm not sure if it was worth all the hassle, me and my dad have a decent enough working relationship anyways (ok basically I'm good at buttering him up and approaching change in a subtle way ha), but anyways if we were not in an official partnership I wouldn't see much of a difference in anything at all, by going down that route we did have a lot of hassle with changing the farm bank account, sfp issues etc etc, which all take time to sort out. The get out agreement in our case thankfully is not of much importance, but I know people who are unofficially in business partnerships in other areas, one in particular where one partner wants out because the other partner does nothing, things are very messy there now because nothing was put on paper when they started the business!

The biggest financial benefit we'll get is probably the 50% stock relief, however it could be argued that if I went it alone I'd get 100% stock relief.

Actually also, there is a 40k income limit for the young farmer partner in it, make sure you are under that. I don't know if that is before or after tax.

leg wax

what ever about a partnership, if you are going at it make sure that the farm will be yours,as things change,you get married, and the **** hits the fan, you working for years and they wont sign it over.

JCB1

All good advice so far, I was in your position a few years back and formed a partnership with my father. It can work well but both sides need to enter in to it with eyes open. You need to discuss all aspects - good and bad, and what happens when things are not going to plan, whether its personal or related to the farm.
I also work full-time but again thats not a problem - just define responsibilities and expectations in advance.
As regards tax - you can write off farming losses for the first three years against your PAYE and get a refund if applicable. Get a good solicitor and a better accountant. Both will be worth the investment and pay for themselves if they are doing their job correctly.

milkprofit

Timmaay wrote: »

The get out agreement is the most important reason to get an official partnership in my view!

t. The get out agreement in our case thankfully is not of much importance, but I know p

Nor to anyone unless one wants toor has to get out

jfh

Timmaay wrote: »

The get out agreement is the most important reason to get an official partnership in my view!

I'm in one with my dad at the minute, to be honest on hindsight I'm not sure if it was worth all the hassle, me and my dad have a decent enough working relationship anyways (ok basically I'm good at buttering him up and approaching change in a subtle way ha), but anyways if we were not in an official partnership I wouldn't see much of a difference in anything at all, by going down that route we did have a lot of hassle with changing the farm bank account, sfp issues etc etc, which all take time to sort out. The get out agreement in our case thankfully is not of much importance, but I know people who are unofficially in business partnerships in other areas, one in particular where one partner wants out because the other partner does nothing, things are very messy there now because nothing was put on paper when they started the business!

The biggest financial benefit we'll get is probably the 50% stock relief, however it could be argued that if I went it alone I'd get 100% stock relief.

Actually also, there is a 40k income limit for the young farmer partner in it, make sure you are under that. I don't know if that is before or after tax.

thanks for the indepth post, probably more trouble than it's worth. I'll leave him check it out with accountant.
i'm over 35 & not entitled to stock relief.

Farmer Pudsey

There is no reason that you could not go to another accountand and get his advice, You should have copies of the accounts for the last few years. Migh cost you a few hundred but might be worth it. This is not big money in the scale of things and he might do it for nothing if he taught that he might get new buisness.

Go to accountants that are involved mainly with farmers not small buisnesses. This is why I often advice people to go to FDC or IFAC as both of these are mainly farm accountants and specialise in it. Maybe there are a few accountants in you area that deal mainly with farmers however they may not have the resourse sucah as the firms have to keep abrest of tax law and it changes.

Timmaay

jfh wrote: »

probably more trouble than it's worth.

Hmmm maybe I came across too negative, in my situation, and on hinesight it might not have been worth it, but I get on well with my dad and we hammered out fairly well whats happening down the road anyways, my main point is that there is quite a lot to setting up the partnership, the agreement itself, then bank accounts/herd keeper changes/sfp etc etc and you need to be prepared for that if you go down that route.

Going back to my original point about the get out agreement, I still say that it is the biggest benefit of a partnership, think of the partnership as insurance, you hope to never need it, but if you do you'll be very glad you have it!

http://www.ifac.ie/ wealth of knowledge on this website also, it always pays to have your homework done in my opinion, and be ready to ask questions to yourown accountant about things, you'll quickly find out if they are being lazy or are not up to scratch!