Shropshire Farming Talk: Where to start in tackling the fallout from the Budget
Having recently had several meetings with concerned clients and their advisors about the potential fallout from the budget, particularly with relevance to Inheritance Tax, what has become clear is that the best place to start is with who owns what and how it is used.
So often I go on to a farm and speak to a family who believe that the farm and its assets are owned by the “family” in some nebulous, but poorly understood, fashion.
No professional advisor can give good advice unless they know very clearly who owns what and how it is occupied.
Does Granny still own the core farm, or did she gift to the grandchildren and has she retained a life interest?
Whose names are on the title of those off-lying fields purchased 15 years ago?
Moving on from actual ownership, how is all the land occupied?
Are there any tenancy agreements?
If there are, they don’t have to be in writing, although they ought to be.
Is the land occupied by the business as a partnership asset or is it just used by the business under licence from the owner?
These are all questions that each family farm needs to get to the bottom of first so that they can then go and seek proper professional advice.
Too often the value and occupation of the land has been the sole focus but now with restricted reliefs on the horizon, the value and ownership of the livestock and machinery is a very key feature.
I frequently see farm accounts without a proper capital account showing how the partnership or company assets are owned.
Furthermore, there is often little information on how and when the assets of the business were last valued. Large, quoted companies must have regular revaluations of assets for the accounts but this is rarely the case for a small to medium size farming business.
An up-to-date valuation of the farm’s assets will be another key piece of information to allow a proper assessment of the farm’s worth and therefore inform a sensible and reasoned strategy for the future.
by Mike Taylor , Senior Partner of Barbers Rural Consultancy LLP , who can be contacted on 01630 692500 or m.taylor@barbers-rural.co.uk
