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The notes given below are for guidance only and claimants must inform RPA of any changes to their business structure or interests of any of their business associates in other farming business(s) for a full assessment to be carried out.
Single / Separate Businesses
Single / Separate
When deciding if a farming business is deemed to be a single or separate business for IACS/SPS purposes it depends on the business structure and if the business or any business members has an interest in any other farming business. In the main, where land is, or who owns the land does not form part of this process it is who is farming the land and applying for the aid.
The main factor in most cases is the percentage share holding, but other factors such as who has the ultimate responsibility for long term and daily decisions and the transactions between the businesses
We have given 3 scenarios below to explain what impact share holdings can make on the final outcome. (These examples do not take into account who has long-term / daily decision responsibilities which may change the outcome.)
SCENARIO 1 –
WILLOW FARM and ASSOCIATED FARMING BUSINESSES
Willow Farm (WF) - Partnership (3 partners) (SBI 333888777):
The business rears sheep and beef and grows some forage crops.
Tim Newark lives with his wife Mandy, at Willow Farmhouse, New Lane, Anytown, XX1 1XX where all the Willow Farm business records are maintained by Mandy Newark. The business has land close to the farm buildings and also has grazing rights on Sieve Common, 14 miles away.
Partnership Status /role Percentage share holding.
· Tim Newark; partner 50%
· Martin Newark; partner 20%
· Fiona Newark. partner 30%
· Mandy Newark secretary 0%
In addition members of this business are involved in two other farming businesses as follows:
M & F Dairy Enterprise (partnership) and Tasty Tamworths (sole owner)
Both are based at Ghyll House Farm
Martin and Fiona Newark are married and live with their daughter Katie, at Ghyll House Farm, Old Lane, A village, XX1 2XX. This farm is 16 miles away from Willow Farmhouse and 12 miles from Sieve Common. There are fields close to the farmhouse which are used for animal grazing and crop production by the Willow Farm business.
A further two fields are used exclusively by Martin Newark for Tamworth Pigs.
Some of the other fields are used exclusively by M & F Dairy Enterprise to rear Fiona and Martin’s herd of Jersey Cows.
M & F Dairy Enterprise (partnership) SBI 777444222
Partnership Status /role Percentage share holding.
§ Martin Newark partner 50%
§ Fiona Newark partner 50%
Katie Newark employee 0% (works part time for her parents and also as a herdswomen at a neighbouring farm.)
Tasty Tamworths (Sole trader) SBI 333999666:
§ Martin Newark sole trader 100%
Assessment .
As there are common partners (Martin and Fiona) in the above businesses, we now have to consider whether the businesses they have an interest in can be deemed to be separate.
Based on percentages given above :
As neither Martin and Fiona (total of 50% in Willow Farm and 50% each in M& F Dairy Enterprise) have a substantial share in Willow Farm then these businesses will potentially be considered to be separate businesses.
However as explained above, there are other factors which are taken into consideration such as who is responsible for making the long term policy or day to day decisions, which will also impact on whether it should be a single / separate business.
Scenario 2
However by changing the percentage share holding as shown below,
Willow Farm (WF) - Partnership (3 partners) (SBI 333888777)
Partnership Status /role Percentage share holding.
· Tim Newark; partner 34%
· Martin Newark; partner 33%
· Fiona Newark. Partner 33%
· Mandy Newark Secretary 0%
M & F Dairy Enterprise Partnership (2 partners) SBI 777444222
Partnership Status /role Percentage share holding.
§ Martin Newark partner 50%
§ Fiona Newark partner 50%
§ Katie Newark employee 0%
Tasty Tamworths Sole trader SBI 333999666
§ Martin Newark sole owner 100%
Assessment
Based on percentages given above :
Martin and Fiona now have a substantial interest in Willow Farm (66%) and 100% interest in their own business M & F Dairy Enterprise, these now become 1 single business. As Fiona has no interest in Tasty Tamworths, this business will remain a separate business. .
Scenario 3
Willow Farm (WF) - Partnership (3 partners) SBI 333888777
Partnership Status /role Percentage share holding.
· Tim Newark; partner 10%
· Martin Newark; partner 70%
· Fiona Newark. Partner 20%
· Mandy Newark Secretary 0%
M & F Dairy Enterprise Partnership (2 partners) SBI 777444222
Partnership Status /role Percentage share holding.
§ Martin Newark partner 70%
§ Fiona Newark partner 30%
§ Katie Newark employee 0%
Tasty Tamworths Sole trader SBI 333999666
§ Martin Newark sole trader 100%
By changing the percentage share holding as shown above, although Martin and Fiona have a substantial share of Willow Farm (90%), Martin also has the substantial share in both Willow Farm (70%,) and M & F Dairy Enterprise (70% ). As shown in scenario 2 above, these are still considered to be a single business.
However, as Martin has the substantial share in both businesses this now impacts on his own business, Tasty Tamworths. Because he now has the substantial or total share of all 3 businesses they are all now deemed to be a single business for IACS/SPS.
New / Continuing Businesses
Where there has been a change to the business structure and none of the members have an interest in another farming business, a business will potentially be deemed to be a new or continuing business the following circumstances.
(Please note these are only for guidance purposes and your particular case may have a different outcome depending on your circumstances.)
| Original status | Change | Outcome |
| Sole trader | Death of sole owner – new owner | New business requiring a new SBI - |
 | A partner joining | Continuing business – retains existing SBI |
| Partnership | Death of a partner | Continuing business – retains existing SBI |
| A partner leaving | Continuing business – retains existing SBI |
| A new partner joining | Continuing business – retains existing SBI |
| 2 or more businesses merging | | May retain one of the existing SBIs depending on the terms of the merger and the areas of land involved and the entitlements will need to be transferred to that SBI by way of one or more RLE1s |
| A business has split into 2 or more businesses | | If at least 1 of the original business associates remains in one of the businesses and has the majority of the land, in most cases that business will be determined to be continuing and will retain the original SBI . The other businesses will be allocated new SBIs and will be deemed to be a new business.
Where there is say a 50:50 split each may be deemed a new business and require a new SBI. |
| Sale of a business | The new owner does not have an interest in another farming business | New business and will be given a new SBI and the previous owner will need to complete an RLE1. |
| New owner already has an interest in another farming business | This will need to be investigated as shown in the Single / Separate issues above. |
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