Urgent Partnership Voting Review Required Following Young Farmers’ Clarification

Posted On May 19, 2015 By mhauk

Partnerships hoping to benefit from Young Farmers payments will need to produce evidence of voting rights by mid-June – or risk missing out on around £1800 a year.

While the position of limited companies is clear regarding such payments under Defra’s new Single Farm Payment Scheme, there has been confusion over the entitlement for partnerships, the most popular legal entity for family farms.

David Missen, head of the Agriculture Sector at MHA, the UK-wide association of accountancy and business advisory firms, comments: “Defra has at last published the definition of a ‘Young Farmer’ for the purposes of claiming the enhanced level of business payments in 2015 and subsequent years. And while the announcement brings clarity to those accountants and solicitors who will need to certify eligibility, the onus is now on farming partnerships to produce the required evidence or create a formal voting agreement in just a few weeks.”

The uncertainty around the payments hinges over the definition of ‘control’ in the context of a partnership. The announcement last Friday (May 15) confirmed that the additional payment can be claimed where the young farmer, who must be no more than 40 years of age, demonstrates genuine control over key decisions, either by proving more than 50% ownership share, more than 50% profit share or more than 50% voting share.

A young farmer who doesn’t meet the required criteria on their own, could still claim the payment but will need a formal agreement with one or other partners that guarantees a voting majority. There is no need for any such agreement in businesses where two or more young farmers have a majority interest.

“The maximum annual payment is likely to be around £1800 for a five year period but partnerships need to act now to conduct an urgent review of their arrangements and potentially put a voting agreement in place in order to qualify…or else risk missing out,” says David Missen.

To meet the eligibility criteria of the Young Farmers’ Scheme, applicants must be head of a new agricultural holding or have already set up a holding during the five years preceding the first submission of an application under the Basic Payment Scheme.