Parents selling their business

John_Pierpoint

I think we need far more information about your parents, the farm, the structure of the business (simple partnership?) to offer any concrete suggestions.
Your parents are farmers and land owners - most people in this situation get very confused.
An economist would see a business at the centre of this relationship, that business would be paying wages to the people working for it. Fees to its directors, rent to its landlord and interest to its lenders.
In addition to this logical structure, your parents also (probably) get a free home (mortgaged?) and moan about not being able to dodge all the Council Tax on it.

How come mum & dad are farmers?
Is it a case of "This is the End of a dynasty" or a case of "we started out with one greenhouse and an old van after the war".
Why are mum and dad throwing in the towel - the honourable reason is that they cannot persuade the next generation to take on the 24/7 job.

From your point of view, there is a lot of tax relief at risk:
VAT refunds.
Business rates exemptions.
Single farm Payment(s).
Entry level scheme(s)
Farm building and accommodation privileges for Planning Permission.
Business roll over relief for Capital Gains Tax (CGT).
..
..
..
..
From your point of view the largest risk is the loss of Inheritance Tax (IHT) privileges.

Needless to say with all these special rules, an army of advisers has grown up, pointing out the angles available, especially to those with money. They are buying a landowner's life style, farming's tax advantages and (safe?) haven for wealth generated elsewhere.

That demand for farms, when added to high food prices financing existing farmers to expand, and the "romance" of the perceived life style, should mean a good price for a farm being sold.

[It was David Ricardo, who challenged the popular theory that the price of corn was high because the price of land was high, establishing that the effect was the other way round. So he is a good place to start for teach yourself economics:
http://en.wikipedia.org/wiki/David_Ricardo]


Farming is a bit like show business - for every big star farmer, there are several struggling against world economic forces.

I have, through an accident of inheritance, had a ring side view since the 1970's of a family retreating from a 150 acres and a stone farmhouse to a bungalow and 13 acres. I think they must have been living on the proceeds of land sales. The farmhouse and 45 of those acres changed hands in the crash year of 2009 for almost £2,000,000 - though there had been some tasteful enhancements to the original home.

I had required some advice and got it by listening to this bloke giving an interview to the BBC and then getting in touch:

Friday 23 June 2000

Lawyers recognised in honours list
Several solicitors received recognition in the Queen's birthday honours list released last weekend.
Agricultural law specialist Andrew Densham, the joint senior partner of Bristol-based Burgess Salmon, received a CBE for services to the agricultural industry.
Mr Densham said: 'I am absolutely delighted that at a time when agriculture is going through such a difficult period that our work here has been so generously acknowledged.'
[He has retired now]

This might be an opportunity to take a look at the competition and get a feel for the Zeitgeist amongst local farmers.

http://www.farmsunday.org/ofs12b/home.eb

xylophone

http://www.hmrc.gov.uk/cgt/property/reliefs.htm

Mrs_Egg

Thanks Xylophone for that link, i will read it in more depth tonight.

John_Peirpoint thank you for the points you have made, although I am a little uncertain for your reasoning for wanting to know the how's and why of farmer and giving it up? How would this effect anything? Also assuming my parents moan about dodging paying council tax is a little unnecessary, i can assure you you've given the wrong impression of them entirely but i guess on the internet this can happen

John_Pierpoint

I think the point I was trying to make, is that there are so many special rules and exemptions that apply to "farming", that it is almost a different country when it comes to business decisions.

If I were in your parents' situation, I would do everything possible to retain my "farmer" status; but I live in a home embedded in a "farm" in Essex - 15 minutes from the M25.

If I were a farmer scraping a living on a hill top in Wales, then my attitude would be different.

Buy land, they're not making it anymore.
-- Mark Twain

It is interesting how many well known quotes are attributed to Mark Twain:
http://www.great-inspirational-quotes.com/mark-twain-quotes.html