Share and contract farming
As the farming environment becomes more complex, we expect to see more people looking for alternative business structures, including becoming a sole trader, partnership, limited or unlimited company.
Consideration needs to be given to your legal entity and we are well placed to help you with this process.
Share farming is where two or more parties jointly farm the same land. A share farming agreement typically involves the owner or tenant of farmland entering into a contract with a working farmer (the share farmer). Joining forces in this way can allow knowledge and equipment to be shared.
Each party will need to produce a set of financial accounts and is responsible for their own tax and VAT returns.
Careful consideration needs to be made when drawing up a share farming agreement; for example a poorly created agreement could deem the venture to be a tenancy or even a partnership which would make the landowner liable for the share farmers debts. A genuine agreement will ensure that the landowner still benefits from the Inheritance Tax, Capital Gains Tax and Income Tax advantages of being treated as a farmer.
Contract farming is when the landowner remains involved in decision making but uses the services of a contractor to farm the land. The contractor will supply the labour and machinery and will manage the day-to-day running of the farm. This can be useful for a farmer nearing retirement.
Care must be taken when drawing up the agreement so that it does not appear as if there is a partnership being formed as this has separate tax consequences.
Our team have experience of establishing and administrating both share and contract farming agreements, contact us for more information.