By Suzie Horne
SHEEP premium payments and even the quota itself is at risk unless business restructuring is well planned.
The warning applies particularly to partnerships, says Tom Chapman, business consultant at Grant Thorntons Bedford office.
Many partnerships are currently being restructured because of financial pressures, as well as the more usual family-related reasons.
The implications for quota are often overlooked, warns Mr Chapman.
Partners must hold quota in their own names in proportion to their relative shares in the sheep flock and sign a declaration that they will own the sheep for the full 100-day retention period.
With the retention period running from early February to mid-May, it often crosses the 31 March year-end used by many farmers.
Where there are partnership changes, the year end is the logical date for them to take effect.
If shares in the sheep flock are also changed at the year-end, the partners could be breaking their 100-day commitment.
“The premium in the current year would be at risk, or even the quota itself,” he says.
To avoid being caught by the retention rule, Mr Chapman suggests deferring changes to a date outside the retention period.
“Alternatively, it may be possible to meet the requirements by declaring that an economic interest in the sheep flock will be retained until after the end of the retention period.
“But written confirmation should be obtained from MAFF before proceeding.”
However, he warns this option may make the transfer of the rest of the partnership unworkable and jeopardise retirement relief.