Limited company and SFP update

The issues for farmers that are in limited companies or thinking of going into them has become clearer. They can be broken down into three scenarios:

Scenario 1

Where a farmer established a limited company in 2013 or before and the company has been leasing the entitlements from the sole trader.

There are approximately 450 farmers in the situation where they leased in 100% of their entitlements in 2013 to their limited company. In this situation, the Department will allocate the BPS entitlements to the company in 2015 with permanent effect.

In such cases, the sole trader must be the director or majority shareholder of the company.

IFAC says these farmers will not be exposed to capital gains tax but the VAT issue has to be clarified.

Scenario 2

Where a farmer establishes a limited company after 31 May 2013. The farmer, as sole trader, established an allocation right in 2013 and the company is now submitting the 2014 SPS under the company name.

In these cases, the farmer may lease the entitlements from the sole trader to the company for the scheme year 2014. In addition, to ensure that BPS entitlements are allocated to the company in 2015, a change of legal entity must be submitted under the 2015 BPS scheme year, i.e. prior to 15 May 2015.

Again, the sole trader must be the director or majority shareholder of the company.

Scenario 3

Where a farmer establishes a limited company after 15 May 2014. The farmer, as sole trader, established an allocation right in 2013 and held entitlements in 2014.

In this case, to ensure that BPS entitlements are allocated to the company in 2015, a change of legal entity must be submitted under the 2015 BPS scheme year, i.e. prior to 15 May 2015. Again, the sole trader must be the director or majority shareholder of the company. Farmers need to talk with an experienced adviser/tax accountant to clarify their own situation. IFAC is writing a detailed article on the tax implications of entitlements for companies next week.

15 May deadline

Just over 9,000 2014 SFP online applications have been submitted at this stage. It is well back from the 12,000 put in on the same day last year. SFP paper applications have just started to trickle in. Most farmers have received them at this stage but not all. Go through the form and maps you received earlier in the year. Book in an appointment with adviser or consultant. For 100% entitlements see page 9.