Registered farm partnerships
Have you ever thought about setting up or entering into a Registered Farm Partnership (RFP)? Partnerships have become increasingly popular in recent years. The increase in popularity has been due to a number of factors including national reserve and young farmer schemes, more favourable TAMS grants and for taxation reasons. While some farmers may have set up joint herd numbers this is not the same as a RFP.
Registered Farm Partnerships are proving to be an excellent collaborative farming arrangement which provide a business structure where profits are shared among the partners in a business and also allows for a succession pathway in family partnerships. There are now more than 3,000 RFPs in place.
RFPs between family members are most common in Ireland but there are also inter farm RFPs in operation where non-family members come together to form a collaborative business arrangement.
RFP applications can be submitted at any time during the calendar year. However if you are planning to submit an application to enter a Register a Farm Partnership in 2021, in order for the Department of Agriculture, Food and Marine to have it processed in time for submission of your Basic Payment Scheme application before 15 May 2021 under an RFP number then all applications and supporting documentation for the RFP must be submitted before 26 February 2021.
There are a lot of factors to consider before entering into a Partnership so it is certainly something that should not be rushed without considering all the angles particularly from a taxation angle. Some of the main items to address when submitting an RFP application include:
A new RFP bank account to include all the names of the partners must be set up. All income and expenditure from the partnership goes through this bank account. No farming transactions of the partnership should take place through individual partners’ own bank accounts. This is also the case where Joint Herd Number are operational.
RFPs can be a single herd number partnership or a multi-herd partnership.
Where two individuals currently have their own herd numbers and have been farming in their own right prior to the establishment of the partnership, then this will be a multi-herd partnership. No changes are required except to establish the dominant herd number with the DVO to use for animal registration, herd health management, etc.
Single herd number partnerships generally arise in a family situation where a son or daughter are returning home to farm in conjunction with either/both of their parents in a registered farm partnership
Consult the local DVO or your advisor in relation to adding a son/daughter to the existing herd number or whether the new entrant should establish their own herd number. In most cases, a son/daughter is added to the existing parent/s herd number using an ER1.1 application submitted to the local DVO.
There will be a number of on farm agreements to be completed. These agreements are very important documents and require consultation with accountants, solicitors and agricultural advisors. The agreement forms the basis of a successful RFP where all workings of the agreement are clearly defined. These are legally binding documents so make sure to get them right to avoid any future issues.
When you are submitting an RFP application to the DAFM there is a checklist available with all the documents required clearly listed. These documents include completed application form, Partnership tax reference number, completed bank details document, signed copy of the farm partnership agreement and copy of on-farm agreement. The land folio details and educational qualifications of partners will also be required.
If you are planning on submitting a RFP application for 2021 you will need to have your application and all supporting documentation emailed to farmpartnerships@agriculture.gov.ie before the 26st February 2021 in order to have an RFP number prior to the closing date for the 2021 BPS.
For further information on forming a RFP, please consult the Teagasc website or contact your local Teagasc Advisor.