Questions on herd number and land purchase

Discussion in 'Stock Talk' started by King of the town, Nov 15, 2019.

  1. King of the town

    King of the town Member

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    Hi all, firstly apologies is this is the wrong forum. It's my first time posting here as I have just come across the website while trying to find answers to a few questions that I have. I was even struggling to come up with a thread title as there are a few different aspects to the situation and we are struggling to get answers to different aspects. For clarity I'm based in Ireland

    The situation is that a parcel of land has come up for sale approx 3 hectares. It's an ideal piece of land to buy as it links two blocks of land on the home farm which have always been split by the neighbours fields (the ones now for sale). So this is where things get a little complicated.

    Currently the farm is all in my fathers name and the herd number is in his name only. I have not commenced farming but I have just completed the green cert so I would qualify as a young trained farmer. We are very interested in buying this land but want to structure it as best we can.

    I'm under 35 so it make the most sense for me to buy it in my name as I can avail of the stamp duty relief thus saving a nice chunk of money. The simplest thing would then be to go under a joint herd number but this would prevent me from applying to the national reserve for entitlements on the parcel of land (the seller is not selling the entitlements and in any case Id rather get them for free rather than buy them) as our combined off farm income would be well in excess of the 40k limit. In fact my own income is in excess of this but in 2018 I took a few months off between jobs so nominating that year would scrape me under the limit so I could apply but only on my own.

    So that means setting up my own herd number. So my questions are really around this. My thinking is to setup the heard number, get the minimum amount of stock in early spring put it on this parcel of land and carry it over the summer/early autumn and sell it on for winter as I wont have housing. I can then make a BPS application and apply to the national reserve to be allocated entitlements. Now I will be applying for the herd herd number from the same address as the current one is that an issue? We have a second old crush outside the main yard that hasn't been used in years but I was thinking I could say these are my handling facilities if ever challenged would this be sufficient or do I need to have facilities that I own? The reality is I would actually be using the modern facilities in the main yard but officially the old setup would be nominated for me? Any other pitfalls or potential issues I'm missing?

    Now overall we don't have much interest in having separate herd numbers as its hassle not being officially allowed to have all stock having access to all of the farm and housing etc. Its really just to apply for the entitlement allocation so is there a process for scrapping the new herd number and moving the entitlements over my fathers current one and then we would go on a joint heard number? If there is how long would you need to wait before doing this and finally if all this did happen and we were in a joint herd number would we then be able to get the young farmer top up on all the existing entitlements or would the messy process prevent this?

    Thanks and apologies for the long post but I'm struggling to get answers to many of these questions.
     
    Last edited: Nov 15, 2019
  2. WestCorkBoy

    WestCorkBoy Well-Known Member

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    I think you need professional advice, what area of the country are you in, there are good and bad ag advisors and the difference is night and day.
     
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  3. Mf 7715

    Mf 7715 Well-Known Member

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    A good option in ur case would be a farm partnership which u should look at after u get ur herd no. I'm almost sure u will have an inspection in ur first year especially if u have 2 herd numbers in the 1 address which there is nothing wrong with as long as no stock is mixed. In regards housing u can house cattle in ur fathers sheds along as they are not mixed at least that's what I did before we set up a partnership. I must have had at least 5 inspections. Since the partnership everything is much simpler and yet u still have ur herd no. We are Teagasc clients here and infairness they were a great help. If ur a Teagasc client there's a lad in the Limerick office that was very helpful I can get u his number. I was using my own herd no for prob 15 years got stamp duty relief twice and entitlements from the national reserve. In a partnership you should be able to get all ur young farmer top up plus the 60% grant but ur father will also be able to get the 60% aswell there is also tax relief for partnerships aswell.
    They will be lots of advice for ur situation but that's my experience.
     
  4. 6600

    6600 Well-Known Member

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    Once you get the land you get a non-stock number from the dept and do a BPS application in your own name before May next year. There won't be any entitlements on it but you will be in the system. You can use the land to produce fodder to sell to your father.
     
  5. lough

    lough Well-Known Member

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    I don't think there is any need for you to get a second herd number. My mother had a herd number and my name was added to it, my name always appears first and hers second, I am the first point of contact. I got the top up grant for the shed back in 2008 with both our names on our herd number.
    All the application forms should be online, but the departments website is not the most user friendly that I came across when it comes to finding something

    https://www.agriculture.gov.ie/animalhealthwelfare/animalwelfare/registrationofpremisesanimals/
    See form ER1.1 and the information note above it

    https://www.agriculture.gov.ie/medi...onforms/2019nryf/2019NRYFSTermsConditions.pdf
    I only had a quick read through it but from my understanding you can be named on an existing herd number and still qualify for the reserve (Page 4)
     
  6. Bog Man

    Bog Man Well-Known Member

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    Get your father to buy the land and hand it to you and claim retirement relief.
    Not sure about it but I heard a fairly smart man describing this scenario.
    Put this idea to somebody in the know.
     
  7. nashmach

    nashmach Well-Known Member

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    Maybe a bit blunt but my read is you are trying to game the system to get free entitlements :scratchhead: You'll be subject to inspections anyway, you won't get a herd number or tillage number as 6600 suggested without having a long term lease or the land bought and paid for - doesn't need to have gone through the Land Registry.

    My last point and the most important one, no guarantee that the National Reserve will be in place for 2020.
     
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  8. 6600

    6600 Well-Known Member

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    Fairly sure he'd need to have owned it and farmed it for 10 years to avail of the CGT ret relief, that relief is only on the increased value between his purchase and transfer to you which wouldn't be much, plus the father would have 6% sd to pay and then son has another 1% unless he qualifies as a young farmer, 50% of time to be spent farming, be qualified and before 35th birthday. Plus you have 2 sets of legal fees.
    I'd say put the land in the name of whoever is going to pay for it. It's always best to keep things simple. If a bank are involved they will want the loan in the young person's name.
     
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  9. King of the town

    King of the town Member

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    Many thanks for the replies all and apologies for being slow to respond. I will try to answer some of the questions as I can without having a massively long multi quote post.

    @WestCorkBoy: What little interaction we had with advisors in the past hasn't been good so we have steered clear of them in recent years. Pushing an agenda and well able to charge for it would be our impression.

    @Mf 7715: A partnership is a possibility but is it necessary to achieve what I am trying to? I could get my own herd number, apply for the entitlements and then soon after enter a partnership. Let my herd number go dormant and transfer everything to the original herd number which would be the combined one. But would it be simpler to just scrap my heard number completely and transfer over the entitlements and farm under a joint herd number rather than a partnership? The plan is to transfer over more of the farm in the next few years also to me so not sure really of the partnership route is better or is just having a joint heard number better.

    Ultimately what we would like to achieve is: pay no stamp duty, get entitlements under the national reserve and following that get everything under one herd number to get the young farmer top-up on all our other entitlements and avoid issues with separate stock etc.

    @lough: In general we don't need a second herd number except we want to get free entitlements on it and we would not qualify for the national reserve on a joint application due to being well in excess of the 40k off farm income limit.

    @Bog Man: My father buying in his name is to be avoided at all costs as it means 7.5% stamp duty so regardless of anything to do with entitlements it must go in my name.

    @nashmach I don't really see why it would be gaming the system. There is a system in place for young farmers to avail of entitlements when starting out, why wouldn't I structure things as best I can to try avail of this especially after paying a large sum of money to do the green cert to be eligible. The land purchase will be going though early next year and I plan to apply immediately for a herd number so I will have land in my name for the herd number. I know there is no guarantee on the national reserve but its been in place for quite a while so I would be surprised if they pulled the plug suddenly next year with no warning.

    @6600 As I said the land will be going in my name to avoid the stamp duty, I'm under 35 and the 50% of time farming thing is impossible to prove either way so I'm not concerned about it. I'll be paying for it without a loan though the bulk of the purchase price will be transferred back to me over the coming years using the small gifts tax free exemption
     
    Last edited: Nov 19, 2019
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  10. mixedbag

    mixedbag Well-Known Member

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    You need a good advisor, if you weren’t happy with your last one look for a different one, talk to a few neighbors they will quickly tell you who’s worth talking to
     
  11. nashmach

    nashmach Well-Known Member

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    You are very concerned about entitlements, we are on the cusp of a new CAP scheme and I'd be very surprised if they have the same value or weight as they have had in the past so I wouldn't be making them out to be the be all and end all.

    Also be aware entitlements for distribution have to come from unused entitlements, as far as I know the latter were in short supply hence my comment on anything being available.

    I'd have a read of the T&C's of the entitlement transfers too, there is definitely a clawback mechanism in it but I don't think it covers what you suggest but no harm to try it.

    Also, by having the green cert done and buying land with no stamp duty, you've effectively recouped the cost of the course.
     
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  12. King of the town

    King of the town Member

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    I wouldn't say they are the be all and end all but as people well know making a return on the outlay from a land purchase is not easy particular for part-time farmers. Now we are not only buying this for financial reasons i.e. there is an element of just wanting the piece of land due to its convenience etc but we do want to maximise every euro we can save in buying it and make when owning it through the various mechanisms. That being said ensuring we can get the top up on existing entitlements is fairly important too as ours are only ok value wise.

    Time will tell I guess but I'm hoping they will be available.

    Not sure I follow this bit as I haven't seen anything on clawback? what is this referring to exactly?
     
  13. nashmach

    nashmach Well-Known Member

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    On the clawback, I had thought there was something in the T&C's if your circumstances changed, It's years since I read them last so I could be completely wrong.
     
  14. King of the town

    King of the town Member

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    Well to update on this. I have purchased the land and availed of the stamp duty exemption. Still waiting on everything to get finalised with registration etc before fully taking ownership.

    When is it usually announced if there will be entitlements available though the national reserve does anyone know? All info online is still related to 2019. As if there are no entitlements available our plans will change.

    Current plan is to (scenario 1)
    1) apply for my own hard number
    2) get some stock
    3) Make a BPS application
    4) apply for entitlements though the national reserve
    5) once entitlements are received enter a farm partnership under original home farm herd number and scrap new herd number and get young farmer top-up on all entitlements. I don't know if going into a partnership straight away is doable though or if I will have to wait a year so as to make sure not to cause problems thats not an issue of if its the case.

    However if there is no national reserve then I will just go into a joint herd number from the start and as none of the other steps are worthwhile (scenario 2).

    Any advice on what other things I need put in place? Do I need to open a business bank account straight away (ideally we would use the current farm account in the long run but do I need a business account in the interm for scenario 1 or can I just use a personal account)? Anything else I need to do, assuming things like accountant etc can wait until the end of the year.

    I also want to get setup for reclaiming VAT on land reclamation, concrete etc whats involved in doing that?

    Thanks again for the help and advice.
     
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  15. thefarminglad

    thefarminglad Well-Known Member

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    National reserve entitlements wont be know till BPS application opens for 2020.
     
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  16. drew

    drew Well-Known Member

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    congrats on getting sorted this far.

    on the national reserve you can form the partnership now then apply as a joint herd number to national reserve if entitlements become available. It would save you having to go through getting a separate herd number for a potential short term situation which depending on how your working the land could potentially cause problems adding movements to stock etc

    Should also be able to avail of the young farmer top up this way on up to 50 entitlements I think was the limit
     
  17. lough

    lough Well-Known Member

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    Regarding claiming the VAT back on land reclamation, concrete, gates, fencing, get the work done first and save the receipt, you can claim on any work done in the past four years. I have attached a copy of the form below.

    https://www.revenue.ie/en/vat/documents/form-vat58.pdf
     
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  18. 6600

    6600 Well-Known Member

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    Get registered for income tax from 1/1/20, describe your trade as a farmer. Your father's accountant will do this for you.
     
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  19. Crystal 8011

    Crystal 8011 Well-Known Member

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    When transferring entitlements from my father to myself, i was told there is no form to fill out and it must be done online, but must wait for the bps payment application to open around end of february.

    My question is, is it on the dept. of ag OR agfood website it must be done?
     
  20. nashmach

    nashmach Well-Known Member

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    Agfood. It may not be available when the BPS opens for applications, it could be a week or two later.
     
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  21. nashmach

    nashmach Well-Known Member

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    King of the town, be careful with the bank account. Make sure if you with scenario one, it is your account and only you have control over it. Makes no odds about personal or business account. I wouldn't be bothering with another account from a fees perspective.

    If you go with scenario two, make sure your name is added to the business bank account, that is crucial if and when you will have an inspection. Like scenario one, you have to be able to show you have some control over the financial matters.
     
  22. King of the town

    King of the town Member

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    Ideally this is how we would do it but the off farm income limit of 40k would make us ineligible. Individually our off farm incomes are over 40k but as I took a few months off before starting a new job in 2018 I am just scraping under the 40k if I nominate 2018 as the reference year. Going in a partnership would put us miles over however so if I want to apply for entitlements I’ll have to do it under a separate herd number.

    We want to start getting the top upon current entitlements too however and that along with the movement of stock hassle etc is the reason we would look at going into partnership as soon as possible after getting the new entitlements (if they are available etc).

    I know some think I’m overly concerned about getting extra entitlements but there is little enough out of farming as it is so I think a bit of extra work and hassle is worth it to have the extra few euro coming in every year. If it covers a bill or two it’s not too bad.

    Fully understood, thanks. I have a second current account in my name only that I only use occasionally and has no fees which I was thinking of using. Similar I also know it’s important that I am on the farm account when we do start jointly farming.
     
  23. JohnBoy

    JohnBoy Well-Known Member

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    I will say one thing I've learned, first pointed out by @Ozzy Scott I think is that it's often more hassle than it's worth jumping through hoops to get the grant or get the extra few BPS.

    Do you know how much national reserve entitlements are worth? for 3 hectares it could be a lot of hassle to structure your business in this particular way and may have negative connotations vs partnership in some future schemes.
     
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  24. King of the town

    King of the town Member

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    It's a bit more than 3Ha so would be a bit over 600 euro per year. Not a massive amount but certainly worth a bit of effort as it will add up over the years. I don't think there is really any additional cost either in setting up separately initially and then combining things again its more of a box ticking exercise.

    Overall its more advantageous to be in a partnership (top up on all entitlements, grants, no issue with mixing stock etc) which is why the plan is to restructure into a partnership as soon as possible after securing the additional entitlements. My father is also strongly wanting to do our best to get additional entitlements so its not just me driving it, if anything he is pushing more.
     
  25. 6600

    6600 Well-Known Member

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    The best advice you could take is to focus on making your farm business profitable, any entitlements etc should not be the primary purpose of what you are doing. They are losing value every year and will eventually disappear.
    Where are all the lads now that dropped stock numbers to qualify for REPS, AEOS, GLAS, and extensification, bird cover, whatever else? Most are no longer farming as their farms lost all commercial direction. If your answer is that the only way to make money is to draw grants then good luck.
     
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