Succession planning for an agricultural business
The coronavirus pandemic continues to disrupt the day to day lives of people across Scotland. For many farmers and landowners the nationwide lockdowns have had little impact on the day to day operation of their businesses. Producers have livestock to keep, lockdown or no lockdown.
Agriculture has slowed rather than stopped during the pandemic and with the lack of agricultural shows and their social events in the farming calendar, and hardly a travelling salesman in sight, the past 12 months have provided some time for reflection, Many farmers have been taking a step back and genuinely considering a success plan for their family businesses. Some have decided to make fundamental changes to their operations whilst others have seen the resilience of the existing business structure they employ.
Agricultural businesses are used to dealing with uncertainty, from the basics like the weather forecast and fluctuating farmgate prices to the major strategic issues such as Brexit and tax policy over which they have little control.
What landowners and farmers can do is take stock where their business is at now and decide where they want to be in 10-15 years’ time. Where we are instructed to tackle a succession review, the starting point for us is establishing the overall strategy for the business. This raises a number of fundamental questions. Who are the key players and what is the direction of travel for the business? How would the business continue if one of the key players was to suddenly pass away or get into matrimonial difficulties? Who owns the main assets used by the business and what are their plans for those assets? Is the business looking to expand or wind down to a retirement sale?
We work with your accountants and agricultural advisers who know your business best. The goal is to establish how your business operates and identify any areas where the structure could be improved. The idea is to make your business more resilient and less exposed to known risks such as inheritance tax on the death of a partner or claims available to children who are not involved in the family farming enterprise.
The outcome of the review could be a simple amendment to the farming partnership or perhaps establishing a written partnership agreement where none exists – that job you were always going to get around to! Succession planning can also include transfers of land and buildings to the next generation or even the lifetime transfer of an agricultural tenancy.
For some businesses a succession review will lead to no changes in the business at all. That may be because key players cannot agree on a way forward or that the business is already well organised and a review simply gives the farmer peace of mind that they are on the right track.
We cannot predict the future tax regime or what legislation or regulations the Scottish Government will impose on agriculture. What we can do is establish where your business is at now and navigate a path to where you want it to be.
For more information contact Ian Angus at email@example.com 01467 629300