Farming & Trading StructuresFarming can present unique difficulties in terms of choosing the right structure.
The involvement of different generations and close relatives, its capital intensive nature, the difficulties of “living above the shop” and provision of an inheritance for family members living and/or working away from the farm.
It is therefore vital that a farming family’s lawyers and accountants should work closely with the family to choose the most resilient and tax efficient format for the business. Each type of structure has its advantages and downsides, for example
A partnership can be most suited to family ownership of the business and its assets. It can provide considerable flexibility by treating capital and income in different ways keeping assets in the hands of senior members and income in the hands of those more in need of it. However the arrangements must be properly documented if problems are not to be exacerbated.
Although involving more formality and administration, the convenience of a company as a separate legal entity can maximise tax saving measures and enable shares in the business to be transferred to future generations as and when appropriate.
Trusts have a part to play in protecting a farming business from the threats that can affect vulnerable members of the family such as bankruptcy, divorce, premature death or mental illness.
For further information on farming and trading structures, contact Tim Howells, Agricultural Law solicitor today on 01823 446201 or submit an online enquiry and we'll contact you as soon as possible.
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