Farmers need financial and legal knowledge

It’s time for farmers to get up to date with legal and financial matters.

Changes in the tax code are stimulating interest in earlier transfer of farms. The trend in land values is having the same effect — having dropped from five years ago, but showing signs of rising again. There’s interest in farming through companies, in order to benefit from the 12.5% corporation tax rate.

A new regulation will prohibit solicitors acting for both vendor and purchaser in conveyancing transactions, with effect from Jan 1.

With changes coming thick and fast, farmers cannot hope to be experts in legal and financial matters.

However, keeping up to date can help you better discuss these issues with your solicitor, accountant, or adviser. More than ever, a farmer needs a competent team of advisors in order to make the right decisions for his family and farm business.

“A good solicitor, accountant, and financial planner should all know each other and be fully aware of the goals you have set for your farm business,” says Michael Brady, of Brady Group Agricultural Consultants and Land Agents. He is one of the speakers at the Your farm, Your business seminar in the Carrigaline Court Hotel, Co Cork, tomorrow evening (Friday).

Agriculture Minister Simon Coveney will open the event at 7.45pm. It is free, open to all in the farming community, but please register to attend, by emailing to enquiries@michaelenright.ie or calling 021-4278200.

The seminar will also provide expert advice from Gail Enright, of Michael Enright and Co Solicitors, and Michael Mullins, of Moore Stephens Nathans. Their topics will include estate planning, land and conveyancing issues, farm profitability, farm accidents, farm taxation and the 2013 Budget.

nIs there any particular legal or financial issue that most farmers neglect?

>> Gail Enright: I can’t give any financial advice, but I do believe that farming, like any other business, requires a business-like approach. Farmers are managers who are attempting to make a living from investments they make in land, labour and animals. One of the challenges is trying to balance the safety needs of the home and the operation of the farm. I have seen cases where farmers have been sued because they have failed to take into account safe working procedures, failed to produce risk assessments or a safety statement, and have neglected to have a safety statement record of accidents. It is important that a farmer knows that the farm needs to be a safe place of work, just the same as any employer. Likewise, farm workers and employees are not without their own responsibilities, in that they have to take care of themselves and others working with them, and report to the farmer any hazards that they become aware of. A farmer may also forget that they need to provide all employees, whether full-time, part-time or seasonal workers, with written terms of employment. These written terms can be as simple as setting out the name of the employer and employee, the place of work, nature of work, date of commencement of employment, details of pay, working hours, sick leave, annual leave, disciplinary and grievance procedures. I have seen farmers get into huge difficulties neglecting these areas.

Are more and more farmers looking for advice because they want to expand in line with the Food Harvest 2020 targets to increase production?

>>Gail Enright: Yes, many farmers are looking to expand. Food Harvest 2020 is the agri-industry blue print for development. It envisages huge growth in the area. Farm partnerships will have a very important role to play in the development, as foreseen by this report, most especially milk-production partnerships. Partnerships envisage the development of larger farm enterprises by merging two previously independent enterprises. This increases efficiency, shares workloads, and shares decision-making between members of farming families. The farm-partnership agreement contains the principal conditions of the partnership, including the day-to-day work and management details. It deals with taxation issues and provides that each party to the farm partnership will give a number of warranties. It also deals with the share of the profit and losses. The whole concept of farm partnerships is a growing and very important area. However, partnerships are not for everybody. Therefore, it is important that the prospective partners closely examine all the implications before signing any documentation.

Is there any across-the-board advice for a farmer who has no obvious successor?

>>Gail Enright: Each individual has their own needs. The transfer of a family farm to the next generation is a big decision. Financial, personal, and practical issues always arise. The Budget, each year, always brings particular interest with regard to the tax thresholds. One piece of advice I would give anybody would be to speak to their solicitors, agricultural consultant, and accountant well in advance of any transfer, to tease out any issues. The most important piece of advice I would give is that you have a plan, whatever that plan might be, give yourself some sort of peace of mind, making sure that you have sufficiently provided for your future, and minimise the tax implications where possible.

Question: Are the titles to farms more complicated than for other properties?

>> Gail Enright: No, not necessarily, but they can be challenging and involve a myriad of complex issues, including taxation. The recent changes that came about in the Land and Conveyancing Law Reform Act 2009 have brought huge changes to the area of rights-of-way and way-leaves. The new act totally abolished old rights of prescriptions, as everyone knew them. The position before this new act was that someone could obtain, or be entitled to, an easement (right of way/wayleave) by virtue of long use, that is, what was termed prescription, and it was not necessary to register this right. The new act abolished the old rights of prescription and totally replaced it, and, as a result, this means an awful lot more paperwork.

Question: A lot of farmers are part-timers. Is there any particular area where they need advice?

>> Gail Enright: I believe that all farmers need to consider themselves as managers of a business. Time management and tax planning are often bigger issues for part-time farmers. However, the day-to-day management of a farm enterprise is the same whether you are a full-time or part-time farmer.

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