Single or separate, new or continuing assessment examples
Published 10 February 2020
Applies to England
© Crown copyright 2020
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The following cases are examples only and are not based on any real life people or businesses. Your case may have a different outcome.
Single or separate businesses
When we assess whether a farming business is a single or separate business under IACS rules we take into account the business structure and if the business or any business members have an interest in any other farming business. Who is farming the land and applying for payment is part of our assessment, but where the land is, or who owns the land is not.
Other factors such as the percentage shareholding, who has ultimate responsibility for long-term and, or day-to-day decisions and transactions between the businesses are also part of our assessment.
The following examples explain how shareholdings can affect the final outcome. (These examples do not take into account who has responsibility for long-term and, or day-to-day decisions which may also affect the outcome.)
Example 1
Willow Farm (3 partners) SBI 333888777
The business rears livestock 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 | Partner | 0% |
Members of this business are also involved in two other farming businesses:
M & F Dairy Enterprise (partnership) and Tasty Tamworths (sole owner), both 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. Fields close to the farmhouse 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.
Other fields are used exclusively by M & F Dairy Enterprise to rear Fiona and Martin’s herd of Jersey cows.
M & F Dairy Enterprise (2 partners) 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 at a neighbouring farm) |
Tasty Tamworths (sole trader) SBI 333999666
| Partnership | Status / role | Percentage share holding |
|---|---|---|
| Martin Newark | Sole trader | 100% |
Assessment
As there are common partners (Martin and Fiona) in these businesses, we have to assess whether all of the businesses they have an interest in, are separate under IACS rules.
As neither Martin nor Fiona (total of 50% in Willow Farm and 50% each in M & F Dairy Enterprise) have a majority shareholding in Willow Farm, we will assess these as separate businesses under IACS rules.
However, other factors we take into account such as, who has responsibility for long-term and, or day-to-day decisions, may also affect whether these are a single or separate business.
Example 2
Different percentage shareholdings.
Willow Farm (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 (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
| Partnership | Status / role | Percentage share holding |
|---|---|---|
| Martin Newark | Sole Trader | 100% |
Assessment
Martin and Fiona now have a majority shareholding in Willow Farm (66%) and 100% in M & F Dairy Enterprise, we will assess these as a single business.
As Fiona has no shareholding in Tasty Tamworths, this remains a separate business.
Example 3
Different percentage shareholdings.
Willow Farm (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 (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
| Partnership | Status / role | Percentage share holding |
|---|---|---|
| Martin Newark | Sole Trader | 100% |
Assessment
Although Martin and Fiona have a majority shareholding in Willow Farm (90%), Martin also has the majority shareholding in both Willow Farm (70%) and M & F Dairy Enterprise (70%). In example 2 we still assess these as a single business.
However, as Martin has the majority shareholding in both businesses this now affects his own business, Tasty Tamworths. Because he has the majority or total shareholding in all three businesses we now assess all these as a single business under IACS rules.
New or continuing businesses
Where there has been a change to the status or structure (depending on what that change is), and none of the members have an interest in another farming business, we will assess the business as a new or continuing business.
For example:
| Original status | Change | Outcome |
|---|---|---|
| Sole Trader | Death of sole owner | New business requires a new SBI |
| Sole Trader | Death of new owner | New business requires a new SBI |
| Sole Trader | A partner joining | Continuing business – keeps existing SBI |
| Partnership | Death of a partner | Continuing business – keeps existing SBI |
| Partnership | A partner leaving | Continuing business – keeps existing SBI |
| Partnership | A new partner joining | Continuing business – keeps existing SBI |
| 2 or more businesses merging | - | May keep one of the existing SBIs depending on the terms of the merger and the areas of land involved. The entitlements must be transferred to that SBI using one or more RLE1s |
| A business has split into 2 or more businesses | - | If at least one of the original business members remains in one of the businesses and has the majority of the land, in most cases that business will be a continuing business and will keep the original SBI. We will give new SBIs to the other businesses and will assess them as new businesses. Where there is an equal split we may assess each as a new business and give each a new SBI. For any entitlements that are being transferred to a new business fill in an RLE 1 |
| Sale of a business | The new owner does not have an interest in another farming business | We will assess this as a new business and give it a new SBI. The previous owner must fill in an RLE 1 |
| Sale of a business | The new owner already has an interest in another farming business | We will carry out an assessment in the same way as in the single or separate business examples |