Converting that redundant farm building or piece of land may be something you have pondered, already be in the pipeline or just a distant dream. Most farms I look around are full of development possibilities and even if you have no immediate plans it doesn’t hurt to have an idea of the implications for your business should the opportunity arise. We have come up with 5 things you should discuss with your accountant before making any decisions. It is always best to spend a little extra time planning ahead than trying to implement ideas retrospectively.
- All about the money
How will you finance this new project? Starting with how much you will need, cashflow, forecasts and budgets may not be an exciting start to your project, but it is essential to ensure it is viable. Talking to your bank manager and getting their support of your new venture early on isn’t going to do any harm either.
- Business structure
It is crucial to agree the structure of the business before you are too far down the planning road. Will the new venture be held in a limited company? Partnership? Could it be part of the current business? Lots of possibilities and this decision could have a large impact on your tax bill so is well worth considering!
- Are we all in agreement?
Once you have decided on your business structure, getting everything in writing is always a good idea. You are likely to be undertaking this new venture with others so a shareholders agreement or partnership agreement should be drawn up.
This can be a minefield and specialist advice is a must. Before any work has even taken place it should be agreed with the contractor whether the project is zero, reduced or standard rated. If you have decided to keep your new venture as a separate business you may need to register for VAT. Even once all the hard work is out of the way if development is to produce rental income you may need to do a partial exemption calculation for VAT purposes.
- The end
Not always nice to think about but many people choose to ignore inheritance tax planning until it is too late. Your new venture will provide you with another asset to pass onto the next generation with potential inheritance tax implications. If you’ve already looked at your succession planning, make sure you review it in light of your new plans. If you haven’t, what better time than now?
If you would like further information on the above post or to discuss your own specific circumstances, please feel free to talk to us on 01763 247321 or contact us via our webform.