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The Irish Accounting & Tax Summit
Session 16 - Charity Financial Reporting & Audits under COVID-19
Session 16 - Presentation
This transcript was created using AI and may contain some mistakes.
<inaudible> today. We’re going to look at farm. Taxation is pretty glary for liberation. Um, so we’re joined here, uh, delighted here, but<inaudible>, who’s head of tax for it fact. And he’s a charter tax advisor member of step society of trust and estate practice practitioners, his extensive experience and expertise in Pressman, carp, tax planning, state,
succession planning, tax, and sentence pronounced structuring family and farm businesses. Leading Tara taxation, who haven’t coauthored. The farming in a limited company is a right for you. Um, so again, he’s got various things that he’s going to go to, or I’ve looked at the slides and that, you know, for me, I’m not for in presentation,
just a lot of, uh, there’s a lot of good points that I’m short. I don’t want to learn from here. So I’ll hand it over to you. There are that kind of, Yeah, no, sorry yet. No, just stoke. Sorry about that. Um, yeah. Thanks, John. Um, you know, so far out here,
you know what looking at here today are the foreign tax issues, critical areas for deliberation and just before getting into it, you know, just the people dealing with farmers, just give an overview where farming is at at the moment and where it was for last year when you’re coming up to do tax returns and that so farming in 2020, not going to be a bad year overall,
you know, Farid and that type of thing. One thing I say about dealing with farmers and you have to get used to the lingo. If a farmer tells you it’s an okay year, that means it’s a very good year. If a farmer title, Jeff, it’s a disaster it’s poor. It’s not as bad as they say they are. So just get used to their lingo.
The launder estimate is a good year over estimate, a bad year, what this year is looking to be Weasley, okay. Notwithstanding dairy prices are down grain and tillage is looking reasonably okay, but they won’t know want them to get in and start harvesting and that type of thing. But there are a number of big issues facing farming and facing farming. Now,
when over the next couple of years, there’s the new cap, which is going to be in, in 2022 to deal with basic payment and the old farm subsidies, as we know about there’s the nitrates, which is the whole thing that’s going to come up particularly relevant for the dairy sector, you know, about they’re going to be limited to the number of stuff they have.
So stuff could be the new quarter, the number of stock to have, and the expansion will slow down. That’s why you actually see at the moment, a good few dairy farmers driving on numbers at the moment before the limits come in. So trash a a, um, you, our numbers before this change comes in, and then the perennials that are there with the age profile of farming is getting bigger every year.
And succession is becoming a bigger and bigger issue every year I’ve had in my 15 to 20 years, dealing with farmers at this level, I’ve had the first couple of cases I’ve had this year where I’ve had massively commercial profitable farms with no successor, you know, have never come across that before. And I’m talking about tree 400 acre farm, very good profits,
very good living, not over borrowed, uncertainly family, not interested in coming home to farm it. So in all those cases, we’re in discussions, what happens do we keep the business going, bring in a farm manager? So with all that happening and with farms getting bigger, we’re into different and more complex structures in farming. So what I’m hoping to deal with here today,
then our day a screen is frozen there. It’s not moving forward, John. Yeah. Yeah. So what we’re looking at there is farm structures looking at VAT and farm buildings, and particularly on VAT, the little known trap that’s around VAT for registered, unknown, registered farmers, their capital tax issues around the dwelling house, um, business relief, some issues that are coming up around business relief,
forward agriculture relief and renewables, and some of the issues that are coming up there and particularly something that we’re involved in there at the moment, I do a bit of consultancy work for the IFA or a service to farm business committee. And we’re looking for some clarification of revenue on the issues, entrepreneurial relief and how it applies to farmers and some of the issues that revenue are looking at.
And we’re also then going to look at topical issues, land leasing, farm building allowance, and income averaging, and I’ll actually deal with the topical issues. First of all. So first of all, income averaging, I think I’m averaging is day or for a long time electing to it under section 65, one of the tax consolidation act. I just thought that people are aware of it.
Averaging day care is instead of being taxed on your normal profits, individuals may elect to be taxed on the basis of their average profit. Over a period of five years, big changes came in in 2018. If a farmer, him or his spouse had an all farm trade, they were precluded from averaging in 2018. That changed that a normal farm trade is not entitled to be average itself with the farm can still be averaged if there’s an all farm trade for 19 onwards.
So look at it. If you’re doing tax returns for the 19 year drugs, the option of looking at averaging or previously it wasn’t there, the catch would averaging is you must be assessed to tax for five years on the normal basis. So effectively then for someone who newly commences, it’s seven years before the canopy into averaging. And an interesting thing of view.
Look at revenues guidance note, you look at all published by revenue. Revenue argued that, and even the tax institutes books is where there is a loss in one of those five years, averaging is not allowed. We had an appeal case a number of years ago before the new appeal system came in, where we argued that a loss was a needle profit.
And as a result of it, it should be allowed. We lasted a, a pain when we brought it to the circuit court and we wanted in the circuit court at that time on revenue dropped that. And we have a there that if there’s a loss in those five years, you put it in as a new profit. And as a result, you can claim averaging capital allowances,
come in after your average profits. Some people get confused on top of the allowances, and I know what’s very, very basic, but your average profit is effectively your new case. One profit. We would have a debt people, and I’ve seen it in taken over cases. That is to figure after capital allowances, that’s averaged, it’s not. And also another point of contention is cessation a trade.
What happens do you do a four year look back under the new rules, or how do you do with section 67 ordinary rules over right there? Look back. And as a result of it, you’re looking at ordinary cessation rules. So last year, actual and the previous year actual VSS. So by planning with averaging, you can actually update all averaging quite easily.
You’re most remember if you walked off now you must stay off it in a continuing trade for a further five years. So it’s not as easy to walk in and out of it as it previously was. So, so dive in just on that tonight and be asked about our, I’m sure you’re asked about, let’s say from corporation con cooperate in the farm and you’re on income average.
And, um, you saying you’ll need to look back one at the penultimate year effect. Incorporation is deemed to be a cessation, you know, of this whole trade. So you don’t need to look back. You only look back to one year. So if you, if people engineer it, you know, you can actually get off averaging without their previous beak here.
You’ll have worn Hess. What as against having three or four hits, that’s the way you think. Yeah. So before 2018 would there might’ve been more of an, they should be because it might have been a director or shareholder at that point in time when you incorporate Yeah. Yeah. The reason, one exception on income averaging. And as we all know,
and dealing with tax there’s exceptions around, and if you’re in a partner or if you’re moving into a registered foreign partnership from an individual into a registered foreign partnership, it’s deemed to be a continuance of your trade. There was no discontinuance for income averaging purposes, even though, you know, you’re deemed to seize your trade, but for income averaging, you’re not deemed to cease it.
However, you must apply the cessation rules as normal. And you put those cessation rules then into your average in computation. And it’s the same with commencement. It was brought Hayden for milk production partnerships back 10 years ago. And to be honest, I’m all baffled as to why it was there, but it was brought in at the time. So if you’re moving from a sole trade into a registered foreign partnership,
you’re deemed to be continuing and it can cause you a taxpayer that you’re not aware of. So you may have to work around that. You may have to have a gap between the sole trade on the register partnership and have a non-registered partnership to get you around the average rules, but it’s quite complex that calculation can cause difficulty on revenue or querying that, you know,
with some of the new revenue will facials, you know, being fairly good on technical issues, farm buildings, allowance, fairly basic stuff, but a big point that come up in it, section 55, section six, five eight makes provision for farm buildings, allowance. So any person carrying on the trade of farming is entitled to the farm buildings, allowance.
So even if you don’t own under, even if you don’t all want the underlying assets, but a rector construct the assets as part of your farming trade, Jordan, take it to the allowances 15% for years, one to six, 10% in year seven. And that’s the allowances after VASH and after grants or defending, sorry, Sorry. Just on that.
Then you’re saying if you don’t own the land and you build on it Farm building. Yep. Well, if you have, if you have leased land and you actually erect the building on it, it’s um, if, if you let it be a company leases, the land and the company erects the building on it, the company is entitled to the farm buildings,
allowance on what it erects. It’s not entitled to the farm buildings allowance on what, you know, say at least as in the old buildings that are there. Yeah. Like on delights, the roads, let’s say, you know, sedan, a company could be leasing land from, let’s say the owner and, you know, putting in roads, would they,
would you be getting business announcing that? Well, it’s the payments, whether that’s a repair or a renewal or an addition, you know, because in a lot of cases say a conversion beef to dairy, the roads would be new. What if it was an existing dairy farm under upgraded that’s repair? But if it was the old, if a brand new road,
yes, capital allowances, backpack on it, everything like that. I used to in revenue, a challenge in them, you know, where they have, let’s say this<inaudible> between the company, I’m the owner of the land. There are the buildings or they’re challenge and are looking at what exists today, but then are, you know, if we build on this,
is there issues in relation to, it Least has to have provision number wound to allow the owner or not the owner DLSR to build lessee to build on it. Sorry, I’m number two. There must be a provision in the lease at the end of the time for de lessee to sell those buildings back to the owner at market value at that day. So that’s preventing,
given an issue that prevents a dividend or distribution or anything like that. Yes. Yeah. And what’s happening on that as well, is that by doing that, you see what happens in farm buildings is they actually depreciate in reality very slowly over the first couple of years. So you could actually see in some of the lease agreements that they’re with, they might put a 25 year life on a farm building for depreciation purposes,
but the first five years might only be two and a half, our 5% depreciation. And then, you know what the depreciation is ratcheted. It all pays to get all on that. But if that provision is in it, we have not seen any issue. If it’s not in it, yes. Have challenged it. Uh, next one, there is when farm buildings are transferred with land or anything,
when the legislation was brought home on balancing allowances and balancing charges, there was no callback provision for farm buildings. So as a result with industrial buildings, everything else there’s provision for a clawback. There’s no clawback on farm buildings. So if you have it that the farm buildings are out at the end of seven years and you transfer them at that stage, then there’s no allowances remaining.
What, there’s no clawback on allowances at that stage. Um, we’re less than the full interest is transferred. The transferee is not entitled to allowances. So if you have a freehold interest in land, and if you have freehold interest in as a result of farm buildings, unless you transfer the freehold interest to the company or whatever, you are not entitled to the old allowances that are there,
it might be forgone and also must be important. Be pointed out farm buildings. Allowance is not allowable against rental income. So if you have farm buildings and allowances left and you start renting out your land, those allowances on the farm buildings are lost or not allowable again, drinking land leasing. And just that has come up recently on land. Leasing is land leasing is there.
And does everyone know, you know, the five, seven, 10, 15 year period on land lease thing was a new relief brought in that were land was leased and supposedly leased at market value. There was a relief from stamp juvie on those leases, it’s deemed to be a state aid and that, or previously as part of this, it was,
there was if you had a premium on a leased or a number paints already an underpayment on a lease. So if you have a lease that in reality has worked 40,000 and you’re only paying out Tang to yourself or whoever it is, they lease the stamp duty would be payable at the capitalized value of the underpayment over the period of time what’s happening now on it is that the new lease exemption that stair on this relief is not actually picking up dash at the moment to get the land leasing without any stamp duty.
It must be a minimum of six years and a max of 35 years. And you submit a true Ross. The Ross system is not picking up that underpayment. What they’re doing at the moment is just to take a box. Is the land lease for the purposes of farming? Yes. About it’s a state aid room and all you’re allowed to get in a seal is 15,000 over a three year period,
mainly applicable to solicitors, but we’ve had a good few solicitors coming to us recently and asking us, you know, um, how come it’s not picking it up? And we investigated, and it seems to be a glitch in the system. That’s there at the moment The premium is covered, but the system isn’t recognizing it. Is that Exactly? That’s H yes.
Yeah. And actually, if you actually read the legislation and read it carefully, they haven’t seem to have it all Mesa in the legislation as well. Yeah. Oh, so sorry. So if you have a premium taste charged black, the, whatever, the Mac, but the six 67. Yeah. Yeah. I felt we’re expecting revenue to start looking at these.
No, there’s not, there’s not a lot of them at the moment, but it’s something that revenue Without problem, crap I’m being corrected. Exactly. Yeah. Yeah. And you know what will happen? They’ll sit for a couple of years and then they’ll be back. Yeah. Yeah. Sorry, John, just practically then on, you know, incorporation on the Eastern of the companies,
you know, technically if you don’t need some macro body or into the premium elements, RJ, You are yet. Yeah. But market value is hugely debatable in relation to the farms. What is market value? You know, there was massive variances because of conditions on the lease and everything. Hmm. All right. Yeah. So like, do you see a lot of people just have them nobody’s at all?
Or are they coordinated? You see what top thing is to have to have a lease for the purposes of the department of agriculture for a herd number that’s a one day wonder, you know, you, you, the minute you get the herd number, a lot of people just scrap the leases and are doing it on a rental basis. Now that’s leading to other ratios down the road in relation to retirement relief and relation to some moderate shoes or,
you know, so people are looking at it there at the moment to see<inaudible> Correct. Yeah, yeah, yeah, yeah, yeah. Sorry. No, no, no, no. You’re okay. A couple of voter issues, and this is something, you know, that people find hard to fathom the pup, the pandemic con employment payment taxable for everyone that was in receipt of it with the definition done for farming was different than anyone else.
And the definition for farming was that farmers were entitled to claim it if the inability to sell stock. So as a result of the dairy farmers and tillage were excluded, but if you had an inability to sell the stock because of Colbert, because the market’s been closed at the time of that, farmers were getting it. So be conscious of that. There could be farmers getting it,
and you could say, well, they hadn’t ceased trading. The definition. IFA got clarification that, that they were able to see straightening because the work Naval to sell, but they had husbandry. So that livestock welfare ratios. So once they were doing that, they were able to claim that payment. I know a lot of them are beginning to come off it because of the fact that the scheme is finishing art as well,
that they are able now back in selling stock, as markets are open, it was two weeks ago in the farmer’s journal. And in some of the foreign publications, there was a report that was a new early retirement scheme coming in or farming. And that I have to do a bit of investigation on it because there was a lot of questions asked at the time.
So it was beginning to delay. Succession issues. Guys were standing back in succession, odors knew new, early retirement scheme. So the department of agriculture at a high level have confirmed that it was a pure flying, a kite exercise there’s incentives there on leasing, et cetera, that stay are so why would they be encouraging them every retirement scheme? Because go with people that were going to retire anyway,
Dave played with, they just bring domain area where they could lease the land. And now that most farmers are eligible for the contributory old age pension, there was no need actually to bring it in. So based on the information I have at the moment, these absorbs no, no, because, well, I know the secretary general, the department is not in favor of it.
So, you know, that’s the way it works. Next one just is to look at structures and somebody’s issue. That’s coming up around structures and that type and that, you know, look structure in farming is important. Like any business or farming now is becoming more and more a business. And particularly the guys that incorporates is becoming a massive issue for them because they are,
if we call it the commercial, continuing businesses and that type of thing, and there’s no doubt about it, you know, whether people like it or not, farms are going to have to get bigger to actually survive because there’s know continuing pressure on price. So that means structure is important. So if we look at the structures, the normal one sole trade partnership,
limited company, and then we end up, you know, with other types of structures that are there, we end up with a hybrid, which is a partnership with a company involved in it. And people may say, Oh, what we need that far, you know, it can be needed because of a number of issues, but why are we looking at different structures?
Capital taxes might be there that the person that has to hold the assets for six years. So as a result of, they may have claimed agricultural relief or may have pay in business relief on stock or machinery and that type of thing. So as a result of it, they need to incorporate a, reduce their tax bail income tax bail, but to have a need to actually hold onto the assets.
So that’s why we may end up with a partnership between the individual and his or her company. We may end up a little known thing on stamp duty for, in order for the young train farmers stamp duty relief to apply an individual most farm. So if the individual is director of shareholder of a company, the company farming the land does not qualify the young farmer for stamp duty at the day of transpire.
So the individual might farm. So partnership there with the company, basic payment issues, there may be issues around basic payment. You can’t transfer them. You’re looking to sprayed basic payment. Now the department of ag have an anti avoidance Tang around that. If you put a structure in place to try and put a ceiling on basic payment, that can rule it out times,
which is targeted area major scheme, is that you may have to remain farming as an individual for five years after drawing a grant. So as a result of it, you can’t enter a company. So you may have to bring in a parent or someone into a company, you know, with you in a partnership and results or other registered partnership issues. So as you can see on a tree department of ag issues under three tax issues,
and that can lead to some of the structures coming up, but there can also be banking issues involved in it as well. So just real quick, the partnership, you know, everyone knows the partnership is the tax reporting entity. The partners are the ones liable to tax. We don’t, um, recommend changing the profit sharing ratio, but we bring in a partner salary in it in between,
which is just an allocation of profit. And that gives the opportunity to allocate profits differently in a different year. The tax structure of each partner is looked at. But the main reason for partnership is two reasons times, which is the grants with the department of agriculture, but also succession planning, you know, coming in and also the new registered succession partnership that’s there,
which can bring the 5,000 tax credits into farms. If you look at some of the big entities, the weight are gone on Andrew sharing this as an example of what can happen. We have a family here, father and son, and farming, and that in it, they’re on the home farm, which is the home partnership and the father and cylinder day arena.
They need to get adobo times, but thereafter expanding massively in the last number of years and tax has become an issue. So we put in a company on that side of it. So as a result of it, the wife of the fodder is in the motor is in the company. As the sole shareholder, she got 60% share. The owners have to have 20% for the department of agriculture that solves tax.
It gets double the grants. This was setup. I’m wanting to ruin those days. If you’re in a registered foreign partnership, you’re not allowed to be in another partnership on less, that new farm becomes part of the existing part yet. So what happened was that the farm outside next door to them come up for rent lease. Suddenly when demand looked at it,
he wasn’t entitled to do what, because he’d been farming to a company and he needed an order of three or four years to qualify him for all the reliefs and exiting the company. So the way it was, we set up another partnership on the outside farm. And we brought him the son’s wife in the company, in it, on the right hand side,
and to get money from one farm to another, we’re using a company law group. The bank actually insisted on the company law group from the purposes of borrowing because it’s the home farm that has borrowed what it needs, the income of the outside farm to actually service, they hold borrowings. So you can see there how complex a second unit is becoming and Lincoln Nadine with department of agriculture grants and schemes.
And that if I am looking at these in four or five years time, what will happen is that outside partnership. And that that land will actually be leased into the home partnership because the guy in the outside company, he will no longer a need. He’ll be exited himself from the farm. I need to be willing to lease the land in, but that’s the type of thing we’re coming up against,
you know, from a structure where farms are getting bigger and have to look inventively at some of these issues that are common Oak. So the look then at somebody’s issues that are coming up around that on farm buildings and where this is coming up, the reason some registered farmers now who let it be intelligent or dry stock are now moving into daring. And as a result of being intelligent,
dry stock, they were registered for VASH with the minister of farm or registers for fast he’s subject to the same VAT rules as any other registered trader most account for VAT on sales and entitled to advice on inputs, the same as normal and that all valuable activities are subject to bash, no flat rate addition, bat 58, no longer available. Most, excuse me,
most make the returns to revenue, marks, factories, et cetera, should be notified Bush. Once he’s registered for VAT, the normal VAT and property rules apply to farming under the capital goods schemes and that, and that’s where the catch comes in for these guys, Dan, who are registered and transferring along. So a farmer can, deregister an application in doing so.
A repayment of may be Jew as he must carry out a review of the last 36 months. And if the VAT reclaimed exceeds the back paid a payment will be to put in calculating your VAT repayment to revenue. You’re entitled to add on what would have been the flat rate addition to your sales on it, because you have lost it when you’re registered. You’re now entitled to look at it and see what effect will be made.
And then the is made for capital expenditure, which would have been recoverable via the vac 50 years, and which would have been there. So Dean registration may not call as much of an issue on that. It goes under capital gold scheme, and I’ll show you what I’m I in the moment. But in fact, 58 recovery mechanism, as everyone knows for flat rate farmers,
construction, extension and alteration of farm buildings are structured. Farmland, fencing, reclamation, or drainage, the construction or erection or installation of micro-generation wind turbine are folds will fall take system. Solar panel installed after one, one, 2012. Now I know that there has been a submission made recently to get that definition extended for a number of items that are happening in farming.
One of the things that has happened over the last couple of years, zoned or passes have been allowed, even though it hasn’t been designed solely for farming, it’s allowed, but you mostly, it’s only on capital expenditure, not on repairs. And the claim must be made within four years of the bat. Haven’t been cornered, but if the farmer’s ceases or the acid ceases to be used in farming within 12 months of the bat,
haven’t been incurred including transfer our lease to the company of the land and the asset, because the clawback of it. So if you’ve claw, if you’ve got VASH incurred in the last 12 months and you’re moving into a company or whatever, that’s where one of those partnerships is may have to sit in for a while to ensure there’s no back clawback. So,
as I said before, they’re subject to the same bathrooms, sales of older property. What vegetable, if sold would in five years, whether registered or not. So even if it’s transferred, so a non-registered farm or flat rate farmer transferring buildings within five years of completion can get hit with VAT on them. If you’re VAT registered clawback, if they’re gone to an exempt sale are within 20 years,
you know that they’re moved on within 20 years, that if you canceled the election, you know, you’re caught within it. So that’s where people often get hazed. They look at VAT, registered farmer, moving into Darine docent, want to be back registered or can be on buildings he did before he goes in the non-registered farmer. There’s no 20 year look back.
There’s only the five year. Look back close the back 58th, within 12 months, farm leases, they’re subject to the same VAT rules. As least as the voter properties, nieces exempt would option to tax. Generally, farmland is leased. VAT exempt. Lisa farm buildings may be valuable for the farmer is back registered. And what we’re recommending on that,
just look at the plot. How much is the market value? Charge it on it on exercising, the option to tax inform the tenant generally include enough tax codes in the lease and cannot be backdated. If you look at farmers who are registered for VAT, it’s the very exact same VAT rules as if you’re in property are any to notice. There’s no differentiation between the farmers who are registered for VASH and DOE any older person who’s registered for bath for property comes up.
So the capital goods issue comes up. Farmer seeks to register are moved to a non VAT, registered partnership or company. You can manage the issues on the registration of stock and machinery. We’re looking at it, but it’s around the buildings or the developed in the last 20 years is the issue because you face a clawback under the capital goods scheme, you cannot connect our up to tax the lease under the connected party rules.
So you have the capital goods adjustment. And if you transfer, you must transfer charge. VAT are up to tax our, we have the 13 and a half percent cost. And if you’re de-registered, you have the capital goods adjustment. This is something that is not known out there and we’re coming across it a good bait or revising, you know, solicitors,
particularly on it. We get to look at is around the VAT issue on a farm. Yes. Where it is. I know did a big one recently where we had a conversion from tillage into Derin and a lot of the work was done on the buildings before they looked at the registration and the work 12 to 18 months too late on deregistering because we have an issue one to farm buildings now.
So how do you look at it? You know, you seek a concession from revenue, the reasonable opinion out there from one of the big for that, you know, we could get a credit for the capita gold scheme, you know, because the same, the bathrooms would have applied similar to they’re all veteran property rules on that. And we’ve probed revenue on it.
No, not ourselves true IDFA but no, look to date on it. And the reason there is a move to look for legislative change for farmers to exclude farmers because they’re caught under the new capital goods scheme, where they are entitled to the credit on the old back 58. So rival rather complex. If you’re dealing with farmers who registered for VAT, who are looking to move into daring and that,
you know, it needs to be looked at and specialist advice needs to be taken. The reason that hits daring more so than anything is if you look at it, the farmers supplying a million liters a minute, I talked to 2 cent, a liter, which is 320,000 at 5.4% on it at 16,000 a year, he’s losing and vast on his milk sales every year.
So that’s why it’s very particular to daring. You know, sole trader remains registered the optional that’s there you’ll remain registered as a sole trader and you’re charged the new entity for animal boarding. Now, if you do dive farm building Jews for the valuable trade of animal boarding batter plays at 23%, you end up with an issue on the milking parlor. You end up with a potential department of ag versus revenue issue because you have only one herd number.
And in transferring the stock to the new entity, you end up with VAT on the stock. So as you can see from it, it ends up being rod or right or complex unless it’s looked at. And it’s there just to make people aware of it. And to actually frighten people somewhat, if they’re looking at moving a farmer from a registered entity into a non-registered entity.
So a lot of people are taking the easy option of just remaining registered for VAT on dairy farming. We would advise that, um, it doesn’t make sense. You can come up with some type of structures to get around it.<inaudible> we put in partners putting in land as a partnership and a partnership and the buildings in the partnership as a partner and the company running the business effectively.
That’s a John that’s how it’s been done. Yeah. And see what we have to do with, we have to balance not just tax it’s with the department of ag as well. Yeah. All right. Awesome. Just two other questions there. If you want to take them, or do you want to move ahead and unregistered farm is a farmer in the process of working to Derrick Parks’s new with a new milking system,
fixed structure from a company based in our narrowed who have an Irish fat number can VAT on the milking structure parcels from Northern Ireland Company. Then back on the farm, 58 Kind of big 10 buck on the phone, 50 yet? No, it’s um, an order process. You have to go through my inquiries to rev, explain it to them. And they’ll write to you then,
and they’ll tell you yes to do it under 58, but they won’t allow it initially. Alright. So it is possible. So I’d say it’s possible. Just don’t just advance to tell them we’ve got to tell them before we No, no, no. It’s when the farm rate, it’s a process down here for reclaiming the VASH. Yes. Right.
I’m wondering if the farmers EU acquisitions in excess of 41,000 registered for provide, he has to account for VAT on the reverse charge basis. What is he entitled to claim an input credits? So a farmer acquisitions in excess of 41 total doesn’t flat rate farmer having to register for, cause he’s already 41 toes. He has to count provide on the reverse charge basis.
Is he entitled to the clam and in pro credit Because he is on registered. So he wouldn’t be entitled to in a business to business transaction the bat. Right? Let’s say if that was the same question for the farm 58, it was equipment. What do you, Dan? He, yeah, it depends on what he’s doing. It’s easy. It’s into the vac 58 definition versus something else,
you know, because if we look at it, if the UK ends up on the way outside the EU, certainly when we’re buying something in from a day, we’re going to pay a VASH as an unregistered farmer here. Yep. Alright, thanks. Hopefully that. Okay. So capital tax issues. Um, look, there has been big changes on Capitol taxes over the last number of years.
Um, you know, very positive in the farming sense. And the big ones came as a result of the agri tax review in 2014, which was very, very positive. But one of the things that happened around it was in relation to the farm house, being transferred, you know, on what was the definition of a house and all that they can change.
What, what happened in it was that certainly revenue clarified that if the land was leased out and the farm house leave, leased out what happens. So if 75% of the value of the property is leased, it meets the rules. But if only if more than 25% of it, you know, is leased out are more than 25% of it is the value of the house.
It doesn’t qualify for I Gridley. So we’re coming up against the number of cases. Now what’s happening is the farm house is fairly good house. And as a result of it, maybe built on a field up at one corner it, and he’s creating a new issue on the fact of that. It could rule the whole farm out for agriculture, really.
So people just need to be aware of it. You know, if the farm house is leased out, along with the land and the 75, 25 rule is broken, just be aware of it. Next one, solar panels, this is live at the moment and is really live and particularly leave John and your part of the world in Wexford. And that,
you know, from the point of view and you know, it’s in Len stir one positive. Yeah. Prior to 2017, no relief and no recognition of solar panels or anything like that. But finance act 2017 changes to the definition of agriculture land. And it brought a debt of less than 50% of the land comprised and to gift her and hers since was occupied with solar panels,
Dane, it was being qualified for agricultural relief, but the issue has now come up. Quasi is 50% of the land. And if you look at the definition in the taxes act, the definition goes on. That’s solar panels installed on more than half of the total area of land concerned and that type of thing. So the question comes up on a hundred acres.
Does this mean if 51 acres are under solar, there’s no relief on a strict reading of the legislation you would say, yes, we’ve gone scientifically on this one with her yet. And we have a couple of cases gone into revenue on it, looking for a ruling from the point of view, the new solar panels and that are taking up optically. They seem to take up a lot of the Latin wood.
If you actually look at it in a case at the moment that we have a hundred percent of the land is leased under solar Bush, when the scientific thing is done on it, there’s only 23% of the land deemed to be on available. So it means there’s 77% of the land still available. So we’ve gone with a case at the moment. Is it entitled to agricultural relief or not more companies are coming up this looking for it,
our info on it as well. It’s dubious. If you come up against so one that we’re renting out or looking at leasing land for the purpose of solar, go to revenue through my inquiries and get clarification on what is the definition of 50%, because it’s going to cause issues for you. Business relief business. This relief is available to farm businesses. Being transferred are not to the individual assets being transferred.
So the issue that’s coming up on this, you may look to lease the land for the purposes of getting the income tax exemption from a tax point of view. But if you lease out the land, you’ve ruled out the beneficiary far business relief. If you look at renting out the land by Connick or due to a 2008 case, that’s there, you can actually Connick or qualifies for business relief.
If there’s an amount of management and control. So if you went up leasing out or you’re dealing with someone under looking police out, the land point out that the successor or beneficiary is wringing fence, purely to agriculture relief. So you need to start looking at the success or beneficiary and see exactly where they are and how do they benefit. It might be worthwhile to weigh the tax saving or the tax cost and income tax versus the potential capital tax costs involved in it.
Devin, what’s your view on relation to, or if you are going to own a business, really, maybe you can’t get a culture relief. And in relation to just transferring necessary, maybe land to one sauna, let’s say London equipment to the other, the land, et cetera, that, that, what would your opinion be there? If you look at the revenue guidance on it,
revenue, if you go to revenue, Dale tenure, you’re not entitled to transfer a single asset, but if you look at the revenue guidance and the revenue guidance hazard that you can transfer land. But if, if the guy is going to continue the business of farming on it, we’ve had it in tillage. You don’t need a basic payment, the farm number two,
you don’t need equipment to farm number tree. You can bring in contractors to farm. So as a result of the code, in theory, just on the individual asset, be able to get business relief. Yeah. And you you’ve you’ve, you’ve, you’ve, you’ve been successful. We are very big in case workers ended in total. And what has happened is the land was divided in two and that,
and we have been successful in getting business relief on if I call it for the non farmer. Yes. The nontraditional type farming if we call it. Yeah. Yeah. But it’s case by case would Raven you, because just on business relief, are you the case on Coniac or a number of years ago, and revenue came out on a revenue orders,
number a hundred percent certain, they had this next thing. All you owed them the case and have the print out detail of it. And the officials dealing with it, working aware of it, you know, so conic or On that point, revenue officials not being aware, but I’ve heard of situations where let’s say you’re your own parent corporate and the business,
and you’re transferring the stock part of sorry, a tax written down value. Would you say that the fair market value or an estimate, but even with, um, I’d also be able to say that that excavation is done well, let me, you know, there’s nobody in charged with the mounting, the director’s current account is now able to magnify your<inaudible> value or revenue have been arguing.
Well, actually we don’t see that section three, one, two works in a particular case. We don’t agree with that. Why didn’t you Saturday and for tax with nobody. But I think like the view generally, I think it is that those were Generally, yeah, he’s done. It goes work on it. You read the legislation on, it says that less than market value.
So you can come along and transfer it and be cheeky at a Euro less, and you get it for the director’s current account. But once you do the election for the, um, income tax, you’re making sure that you have no balancing allowance or balancing and charge. And it’s trying to start as across a tax written down value then for the purposes of capital allowances and tax.
Yeah. I’ve heard of revenue potion on that and trying to, to have to, um, you know, not have that, uh, in cases because some of us maybe didn’t understand it, I think to a certain extent as well. Other than that, you’ve seen that in practice a bit. No, no, no. I did. Initially not at the moment.
Wouldn’t surprise me. John ever comes back at the moment with some of the value of machinery that’s common across. Yeah. I think I thought that I know other accounts that I run with the value was high. Yeah, no, no, no. And that’s, that’s where it wouldn’t surprise me on some of the values that are very high. We’ll see if you come back that if you look at it,
if the value that you’re transferring into today is underneath your regional market value, you don’t have capital gains on it. It’s a win, win. And it’s something I’m so pleased that, that hasn’t been closed for a couple of years, because I remember when this came up, first of all, and when we looked at it, we went and we got four opinions on this.
We went to two of the big firms and we went to two boutique firms. And it was funny because the opinions came back were nearly identical. And it was exactly that if you do the election tax and once you go in at less than market value at that stage, then you’re entitled to it. And these are even as late as a fall, Oronite a goal.
I did a guy come true to me and, and we went through it and we wanted the one day argument. Yeah, I’m gonna take that was the case here. But I know that in some of the cases that they went to technical and Dublin and they said, I’ve never seen it before. So To old George book, you know, which Tom McGuire is income tax now.
And you go back to the older versions of it, 14, 15 and 16, that gives an example of, you know, are a very good theoretical explanation of it. And doesn’t quite say about the director’s loan, but it hints at it. Yeah. Yeah. As I say, I think it might be something that they would look at all.
I’m surprised that it hasn’t happened now, because if you look at it, we’ve won there recently over a million more to machinery. I for director’s current account, I’m going across at tax written down value is around 400 grand. Yeah. Yeah. Okay. So the last issue, Dan is entrepreneur relief and CPO was, you know, entrepreneur relief was brought in,
in 15, basically extended to farming and that in 2016. So the question is those five, nine, seven, eight, those are the plate to see for yours. So initially what happened on this was in the original definition that was there. It dealt with dealing in development land. And when the minister for finance at the time, Michael Noonan and under was a couple of PDQs on it,
the answer they skirted around it, what we got true to department of agriculture, and it was not always all UFA got through the department of agriculture that as farmers, we’re not dealing in development land, as a result of it, they were entitled to entrepreneur relief on CPO olds. But what happened was then the definitions and teams were tightened up in 17.
And even though the had the development land definition there from 15, but it was, as I said, dealing in development land. So now the paying on it ease that it just refers to development land. So we’re back into the old current Jews value versus the development value, the appeal decision that was there on development land, which holds that land in the state with value exceeds its current juice value.
So I will be saying at the moment that on a CPO entrepreneurial relief under 10% does not apply to farming because it gets pulled in under the CPO are under the development land definition, which is causing issues for our people and will cause issues. And it’s one of the things farm organizations are jumping on at the moment. So any questions or No, I don’t see any other questions in there allowed tomorrow.
Yeah. I think that, you know, that that is a thing that they would be probably inverted normally, but even then let’s say non CPR situations where you’re sat and your non for maybe far to 50,000 and really the agricultural uses is, is whatever, 10, 15,000 you’re potentially at risk. There was not all yet. Oh, you are big time.
Big time. Yeah. There was a kid, I think there was a case just non-related to defining again, current youth value that my true to tax appeals case, maybe you have it on the stage that just fought his current Jude’s value. But as you said, it’s like, what you’ve just said, it’s I have in the notes to it. I think it’s day or,
you know, we have a, yeah. We do refer to a John, you know, that I emailed notes as well, if those actually refer to it. Yeah. Yeah. It’s just highlighting again. Yeah. They’re still an open out of that way. Yeah. No, it’s not unusual in an area, you know, that you will get a block of land that can go wild and it’s not development value there a couple of weeks ago at 23,000,
an acre that is pure, pure, pure agriculture with not nets. What a couple of very strong guys, what went in against each other on it. It was a good block of land. Um, we’ll never have development value. What it was we go and, um, bought. And he argued was, he said, if all of us hold this money always.
Yeah. Well he must be a dairy farmer to be able to spend that money on that.<inaudible>, You know, some of the take, you know, just remember that on tax and particularly on foreign taxes, you know, there’s changes happening all the time. There’s ambiguity, as I’m saying in areas and just be aware of it. And particularly the ambiguity around the solar as John was talking about there to transfer across I’ve written down value on the director’s loan at the CPO.
You know, so if you’re on certain on it, um, on the director’s loan, don’t call it a revenue because the answer will be no, but on the orders are technical worthwhile going to them and that use the tax acts to benefit your client. And it was actually interesting. There, there has been a recent, the P case or revenue we’re relying on guidance notes,
but actually, and it was around incapacitated child allowance. Eight was around whether someone was entitled to it in a year and revenue we’re relying very heavily on their guidance notes, but the actual opinion, commissioner Wayne penny went word by word by the legislation. And even though revenue’s guidance notes said, the person wasn’t entitled to it, they, uh, legislation was say the person was,
and I would always be a firm believer of your goal to the legislation if you’re entitled to it by the legislation. And there’s no ambiguity around it at that stage, you know, that’s what the stand up. And as I said, remember, the farmer thinks differently. Most of the time they’re optimistic, even if it’s a bad year, they’re still optimistic about the business and that type of thing,
which has given farming grace strength and resolve, and that, as I said, their structures are needed for non tax reasons. No, let it be basic payments. Let it be times that’d be registered partnership. And then the tax reasons that are there, there’s good, solid tax reliefs available to all farming. But the big thing with farming is that it’s not just a farm,
et cetera. There is interaction and you must be conscious of the interaction with the various farm schemes that are there. So that’s why you may find yourself in an area that becomes uncomfortable or you’re dealing with herd numbers. You’re dealing with joint numbers. You’re dealing with tans, you’re dealing with all the various schemes that it all needs to be pulled together. And that’s something,
a good agricultural advisor. He gives the agricultural advice. You give the tax or accounting advice, and then you sit down, I know different to gift inheritance tax or any of those taxes. What might suit on one side may not suit on the order and you have to look around it. So that’s a John. Yeah. There’s some questions coming in at the end.
I see if it is your, okay, so if a farmer set-asides to no entrepreneur, is that right? A small farmer, her sonar say butter, our name, the farm payments are hard. Number one, right? When you expect entity registered as a foreign partnership, yes. Are make tax returns. Normally what would happen in that case is the sewn,
or those was put down as a joint herd number. So they got the young farmer topple. And as a result of a day around the department of agriculture database, which is returned to revenue and as a result of it, revenue will see that he’s getting payments. So yes needs to make tax returns, Um, section 89, maybe. Is that an area that you see as being potentially in any incorporation transferring to stocking?
No. Um, there was very specific rules around farming on stock, very, very specific, and that farming can transfer stock by election. I book value, older grades are somewhat different. What is specifically legislated for our own farming, even in a complete cessation of the sole trade, going into a company once that election is made, there is no issue<inaudible> No,
no, no, no. That can’t be done. Yeah. Yeah. Yeah. It’s different to the machinery stock is very tightly legislator. Yeah. You’d hear some people saying it’s being done and aggressive. Yeah. It’s really, really aggressive. And all that it takes is revenue to bring one case on it. Yeah. Yeah. We made a judgment call on it very early in the day that yes,
you possibly could do it, but it was so aggressive not to do it. Yeah. Very insightful. I think, um, you know, always good to hear the insights. I suppose you’re dealing with the farmers and undead structures, I suppose, the new structures that are being put in place, the ways, you know, there’s so much data with,
you’ve got the tax, you’ve got the departments to try and get the structures at work. Um, so, you know, thank you very much for your time today. It was a very insightful, hopefully everybody else talked to Sam and that your details there, if, if anyone wants to contact you in relation, I think you’ve discussed your details around the site.
If not, maybe you might just, just say it I’m there. And I have decks<inaudible> is the best email and I’ll pick it up. Yeah. No, thank you again. So once again, thanks to everyone that joined us on the IMTS, this the end of the throw for the ATS. I’m sure it was my money. More common on that again,
back later on, again, give more insight and maybe in the future for you, if he wishes to do so to do so. So, um, thanks again. Um, uh, and we’ll talk again. Okay.<inaudible>.