Agriculture and Horticulture
The partners at Sowerby FRS have over 150 years combined knowledge and expertise within the agricultural and horticultural sector. We understand that farming is more than just a business to many of you within the sector, knowing many of you feel merely trustees of the land that you own or farm for the next generation.
That said we also know that like any business the need to maximise the profitability and minimise the tax liabilities are still key.
We are also aware of the challenges you face with the degree of fluctuations both in the sales price for your commodity and the costs of your materials, whether that be seed, fertiliser, sprays or feed.
We are also aware of the capital-intensive nature of the business and the need to be tax effective in the way that you run the business. Our view however has always been that you should only invest in new machinery where is it necessary, with just the timing of the purchase changed to make it tax effective. It is pointless buying a new piece of equipment just to save tax.
Many farmer and horticultural clients have been very good in taking up new ideas, seeing the need to diversify their risk or intensify the business to ensure the continued profitability of the business, our clients fall into the following sectors and have the following unique challenges facing them.
Arable FarmingLivestock FarmingHorticulture
Our services include:
Preparation of your annual accounts with benchmarking in a timely manner.
Present the accounts to the partners to ensure you fully understand them.
Prepare the partnership Self-Assessment Tax Return.
As you know the management of the farms cashflows is very important and ensuring that the farm, as well as the individual partners, has sufficient cash to meet their obligations, including their tax demands are very important.
Prepare and present quarterly or monthly management accounts.
Prepare projections and cashflow forecasts.
Provide book-keeping and payroll or work closely with your farm secretaries in this role.
The need to look at the long-term goals and aspirations creates further need for specialist advice which we can assist the farm, partners and management with.
Succession planning is always important and key for many farmers to implement, and it is never too easy to put this in place. We are not suggesting that you should transfer the farming partnership to your children when they reach 18, however an open discussion with your family about the future always ensures a smooth transition.
We can assist and advise you on the project, in partnership with your land agent and solicitor and, due to the complex nature of your business, this partnership of professional advisers is key to the success of the succession planning.
We understand the unique challenges facing arable farmers whether they be landowners or tenant farmers.
For us to give the best advice we need to understand what land you own, who owns it, the partnership, you personally or other family members or through a pension fund. This way we can ensure that you do not fall fowl of the tax legislation as you plan for the future and either diversify or plan for succession.
We would normally prepare a benchmarking document comparing yields and average prices and margins for the business to ensure that you were maximising your profitability.
We can also assist and advise on the purchase of land together with the related finance needs.
As indicated earlier succession planning is very important and with the diversification that has occurred within the sector, it is no longer an option just to assume that there will be Inheritance Tax on death and passing the face to the next generation.
As the value of land has increased significantly the tax implication of getting this wrong can be painful.
We have seen farmers utilising excess farm buildings by converting them to holiday homes, however rather than operating that business themselves allowing some of the children to operate the business. The segregation of the business and assets and the type of business could mean that these assets no longer attract either BPR or APR and become chargeable to IHT.
Understanding the type of tenancy that you hold helps us and you when making decisions. There are cases where it has been beneficial to surrender a 1986 tenancy for an FBT, if there are doubts about the claims for succession within the family. It may also help the landlord which means that as a tenant you can obtain greater concessions.
We understand the additional capital costs incurred in intensively farming pig or poultry and we can assist and advise on the tax implications of the investment in the buildings and the capital allowance claims.
We understand that the price obtained for the product and the cost of the feed is key, even if you farm the produce yourself to feed to your livestock.
It is also imperative to explore all possible tax concessions with Research and Development Tax Credits (R&D Tax Credits) an area that many advisers either forget or ignore, whilst this tax concession will only be available to the larger producers it is still an area that needs to be explored
As with most businesses the key to success is ensuring that you have what the customers wants. We understand that for most businesses within the sector you are a small supplier to multi-national companies and therefore your income is to some degree dictated by your customers.
The key therefore to maintain profitability is to ensure a high yield and control your costs.
The need to actively control your staff cost is also key and has increased as the rate for living wage has increased. As many in the sector have historically used piece rate to control the hourly wage costs the need to ensure that the staff are working effectively coupled with the need to monitor that the piece rate is above the living wage is imperative to ensure that you comply with current legislation.
Energy is also a key cost area that needs to be controlled, however with all the new source of renewable energy available many businesses have managed to offset there heating costs with the energy generation income leaving them cost neutral.
The tax implication within the sector are complex and need to be explored to ensure you are as tax effective as possible, whether that be with the capital allowance claim for the glasshouse or Research and Development Tax Credits (R&D Tax Credits). We will help ensure you claim all the allowances available and in the most tax effective manner.
Because of our substantial number of clients in this sector, we have access to a significant amount of data both relating to our individual clients and the industry as a whole. The access to this level of data enables us to provide a detailed benchmarking service to review your business performance against the performance of other businesses in the sector.
It goes without saying that benchmarking is of course carried out without jeopardising confidentiality.
WHO CAN HELP YOU?
Our Agricultural Sector Specialists
Whether you are looking for a new accountant or simply would like a second opinion on your business, we offer a free initial meeting consultation on an absolutely no obligation basis with one of our industry specialists.
For further information contact one of our specialists: