Partnerships under fire
Partnerships under fire
WITH many farm businesses enduring increasing and prolonged financial pressure, the number of partnerships being dissolved is rising, say advisers.
Milk quota can be an especially difficult area when this happens. Tax, legal and valuation issues raise the most common problems.
Quota values have plummeted compared with the figures shown in many farm balance sheets. Partners all want the maximum pay-out they can get and it is often difficult for those not involved in the industry to accept that they will not realise the balance sheet figures, says Roger Bush, a partner at Gloucester-based BK.
There is also the prospect of Capital Gains Tax for those disposing of milk quota and other partnership assets, especially if they are not yet 50 years old, when retirement relief begins to become available.
Several documents are essential to help a dissolution go smoothly. The first and most often lacking or missing altogether, is a partnership agreement.
"Unfortunately, in many cases there is no written partnership agreement or if there is, it is often unclear."
Other essential documents include balance sheets from up-to-date accounts, deeds to jointly owned property, tenancy agreements or contract arrangements, registration documents for milk, sheep and suckler cow quota, leasing and HP agreements.
Dissolution is stressful and rarely straightforward. Where one member wants to continue farming it can be particularly difficult.
"The fairest most cost effective way is to sell all assets and allow partners to take their share," says Mr Bush.