Farming Partnerships & Accounts Disclosure - Risks & Pitfalls - Live at Your Desk

Introduction

This virtual classroom session will consider how to present farm accounts in a tax efficient way for farm tax advisers. This is of particular focus post the Autumn Budget 2024 and the slashing of IHT reliefs.

With the loss of tax reliefs for FHA (Furnished Holiday Accommodation) the farm tourism offering comes more into focus.

Many farmers (and their advisers) dismiss partnership accounts as simple income and expenditure accounts to help agree January and July income tax payments. However, they can be evidence as to ownership of £multi-million farm partnership property and strongly influence capital taxes planning together with ownership debate. Farm ownership has been brought under the spotlight with the registration of partnership property held in trust under the TRS - impact on accounts together with the Spring Budget 2024 announcement of review of tax on ecosystems, especially ELMS (Environmental Land Management Schemes) and the working party appointed - we still await guidance.

The disclosure for relatively small amounts of income and assets can have defining implications for capital tax relief. With farm values being high/variable and farm development monies being so potentially significant, the IHT and CGT implications of mis-disclosures, misunderstandings or mistakes in farm partnership accounts can cause significant problems. This live session will include an emphasis on the importance of the accounts for protection of all taxes in the round including CGT, IHT, probate and farm disputes, for example the cases of Guest, Mate and Ham.

This live broadcast will help you to understand the full complexity of the tax and legal implications of farm partnership accounts so as to ensure that your professional firm and farming clients are fully protected from the risks and pitfalls of inadequate and/or misleading accounts have on capital taxes. Suitable for probate lawyers, Will drafters, and anyone dealing with succession planning who need to understand farm accounts in tax terms.

What You Will Learn

This live and interactive session will cover the following:

• The impact of the 30 October 2024 Budget on farm partnership accounts
• Consideration of the accounts and tax treatment in that “gap” period before the consultation working party guidance on farming for the environment
• The need to consider partnership property held in trust and registration - TRS - impact on accounts and the importance of a strong partnership agreement
• Accounts impact of negligible value claims for purchased BPS
• Importance of the farm accounts disclosure when no partnership agreement and need to identifying partnership property and intentions
• The Lane case re when a partnership ceases and what is partnership property
• Misunderstandings of the difference between partnership property and jointly held property by farming partners and advisers
• The useful information contained in farm partnership accounts in farm dispute cases - discussions, mediation and the courts, e.g. Guest, Horsford and James
• Ham v Bell judgment regarding evidence of partnership/non partnership property and errors by accountants and understanding intentions of the Will
• The power and necessity of the ‘land capital account’ for freehold property protection and capital accounts generally and inclusion in the partnership agreement - greater need for updated partnership agreement
• Understanding ‘hope’ valuations - Foster ‘Top down’ method and disclosure
• The significance of the approval of the accounts for the ‘wet signature’ in formal partners meetings with strong minutes
• Unregistered partnership land and evidence from the accounts
• Evidence of freehold property disclosure and supporting workings - the importance of valuations post 30 October 2024
• Problems of showing a potential trading property as an investment, e.g. Stolkin
• Link of accounts freehold property and improvements working papers to CGT base cost control, rollover and 'unascertained values’, especially with lifetime transfers
• Horsford partnership agreement to prevent proprietary estoppel
• The “Brightline” trading concern over all farm diversification, especially farm tourism including farm FHA and the farm tourist offering
• The need for clear disclosure notes to the farm accounts, for easy cross reference to enable partners to understand the detail of accounts - maximum rather than minimum information and the use in succession planning
• The need for those drafting farm wills to have access and understanding of the farm accounts and exactly what is owned by whom
• The significance of partnership accounts information for completion of the IHT 400 and supporting schedules on probate
• The importance of partnership profit shares, drawings and overdrawn current accounts on various legal and tax aspects of the running of the farm partnership
• The complexity of partnership farm diversification on VAT status (zero, exempt and standard-rated) with key understanding of the resultant accounts disclosure, especially with the recent attack on zero rated food
• Consideration of the devaluation of land through long term carbon contracts and the CGT impact on receipts with move to farming for the environment
• The matching of the ELMS income ‘upfront’ with the future costs of the maintenance of the farmland whilst waiting for the working party guidance
• The need to show the clarity of trading activity over investment activity re Vigne, Graham, Maurice & Shirley Bell and Butler
• The disclosure of agriculture tenancies and rents and the tax importance thereof together with strong working papers

Please note that we will only be looking at ELMS as it applies to England.

Recording of live sessions: Soon after the Learn Live session has taken place you will be able to go back and access the recording - should you wish to revisit the material discussed.