CAP reform: get advice on business changes

Farmers planning a change in their business structure should seek specialist advice ahead of this year’s Single Payment Scheme applications.

“With uncertainty around the final shape of the new basic payment scheme, it is certainly crunch time when it comes to those setting up new businesses. Should they be set up ahead of May 2013, ready to make a first claim as a new ‘farmer’ under the Single Payment Scheme?” said Julie Robinson, lawyer at Roythornes Solicitors.

“There are arguments both ways. There may be pressing reasons, quite apart from the single payment scheme, for a new business to be set up and make its first claim. Succession planning, death and divorce may overshadow concerns about the shape of the new scheme and whether there needs to be continuity in the business. In that case, farmers may just have to ‘take a view’ following advice.”

Farmers making decisions about entitlement transfers and new business structures, should speak to an agent or lawyer sooner rather than later, she said.

“You have to build in alternative plans and if you are changing the business, particularly if you are setting up a new business, you need to do a lot of ‘what if’ scenarios,” added Ms Robinson.

“They key thing is to try to make sure that you keep the value of current entitlements where you intend it to be. It may not be fatal to future claims if you do set up new businesses, but we don’t have enough information at the moment to guarantee that there will be a smooth transition from the current Single Payment Scheme to the new regime – some farm businesses may prefer to wait until the position is clearer.”

With capping of large claims on the horizon farm businesses planning to downsize will have to have a good reason for doing so, beyond trying to avoid the cap, she said.

“The authorities don’t look kindly on businesses which enter into artificial arrangements just to avoid having their payments capped.”

“Now that most of last year’s payments have been made, farm businesses should start preparing in good time for this year’s claim. If entitlements need to be transferred, give yourself plenty of time. Don’t end up rushing and making hasty decisions.”

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