6 replies to this topic

[mike]

Recently read field to farm, and doing lots of research to get my ducks in a line.. Thanks for putting pen to paper David, its a real eye opener - I've been like a kid with a bag of sweets for the past few weeks, planning things out, researching costs, returns, caravans etc!

I am wondering what the format would be of the financial information submitted to the planning authority to justify a dwelling.
I currently have a reasonable paying job in a surveying business.

I believe that I could (whilst getting the animal, and subsidiary earners off the ground) still work part time from my mobile home or a laptop in the barn, and bill the company. This would then appear on any balance sheet as 'labour' billed to a third party company and paid to 'mikefarmltd' as subcontracted labour or whatever. Is it likely that this would fall foul of the planners, as being 'non agricultural earnings' - or is it only the same as diversifying into non agricultural enterprises such as the caravan site?

This additional income could end up being the swinging vote in either a) permission or no permission or size of house commensurate with income. My aim would only be to have this as an 'insurance policy' - I have every intention of being a full time small holder long term.

Mike

[Canning Farm]

From reading this post I would also like to add to it by raising the following question.

If Mike was cash rich could he then sell his own produce to himself.

For example; If Mike had say �75,000 spare cash he could sell all of his pigs and chickens to MikefarmLtd, in his first year. He could then do the same again for the second year and again the following year. This would then show Mikes farm with a steady income stream of �25,000pa. Whilst this sum would be liable for tax at the current rate, as far as the planners would be concerned this would show the income that his small holding earned. It would be this sum that the Local Planning Authority would make their assessment for Mike to build his house. Although this may seem like a loss leader initially in having to pay tax on ones savings the long term benefits would be far greater as the end investment would be the benefit of a house and turning the dream into reality.

NB: I may start a thread later but this topic also raises the question as to whether Mike could claim tax relief for part of the �25,000 his small holding earned eg; for investments made back into the smallholding. Any Tax experts out there then your opinion would be very welcome.

[Canning Farm]

Another thought has just occured to me.

Lets say Mike buys his land and then sets up his company MikefarmLtd, and then applies for permitted development to build his barn. Once approved he could then go about building the barn and poly tunnel and moving a caravan onto the site. Instead of moving onto the land Mike carries on working and living where he is as a surveyor, saving money as he goes.

I remember reading a tax related article, (in the Times I think), about Gentlemen Farmers. Therefore my question is can the cost to contruct the barn, poly tunnel and caravan be off set through tax relief against Mikes salary. The construction of the barn could be viewed as an investment as the farm for that year will be running at a loss. This would then justify the �75,000 Mike would use from his savings made towards MikefarmLTD to show the income the farm made. After all it is money that Mike would have to layout to construct the barn and place a caravan on the site.

Any other thoughts welcome.

[mike]

Thanks Wurzel,

I think we might be safer considering this particular mike as being in the 'not cash rich' camp!
Any savings are likely to be long gone, and loans make up a chunk of the 'mikefarmltd'
but your points are still totally relevant, i don't want to hoodwink the planners or cook the books,
but i may well need to 'diversify' into doing a bit of my old job for the first few years. My thought was
that rather than paying tax on my earnings, THEN buying produce from mikesfarmltd and paying tax again,
that all of my personal incomes and outgoings (including billable hours working for other companies) come under
mikefarmltd. That way, as you say, the outgoings are offsetting my tax liability - i earn say �15k for part time surveying,
but spend �15k in machinery, livestock and so on- therefore break even and zero tax liability.

Just don't know whether the planners would discount any 'non farm' related income from the calculations....? 

[mike]

sorry - thanks canning farm - i hadn't realised that we are all wurzels- i had started to wonder how wurzel had written so many posts !

wurzelmike

[Canning Farm]

Hi Dave

I would appreciate any imput you may have to the above questions raised.

My concern is being realistic with the amount of income that can be raised from the small holding. within 5 years. My initail view is that it will be lvery low. Infact it may even be called into question as to whether the fininacial test will be met and the application to build a house (and a very small one at that) will be rejected.

At this momemt in time I am exploring all avenues through legitimate means that are open to anybody that aspires to follow this well meaning and very realistic route. If there is a means to build the barn through tax relief then significant savings can be made were funds can be directed eleswhere to achieve the desired end result.

I look forward to any ideas that you may have at your behest.

Canning Farm

[foodhero]

Hello
I heard a story about something like this over a farm gate.
For arguments sake lets call the idividual involved shoddy small holder, he starts his enterprise with loans made by a few elderly individuals in the village. Gets agricultural bussiness plan advising say 150 sheep on the land , he goes to market and buys the cheapest animals available delivers them to land along with a site hut.
At this point everything is ok, sheep eat the pasture and he runs another desktop publishing business by day from the site hut.
The problem is the sheep are poor quality and start dieing so he buryed them on site and to covre the loss starts running two sets of books money in from desktop publishing becomes sale of sheep. He is also converting the land for organic status and so has other organic neighbours interested in how he is getting on. In winter the sheep are hungry so the neighbour sells him some hay,but already suspicious places the hay in a position to be monitored from the road side. The hay didnt get distributed out to the animals. At this point all shoddy small holders problems came to a head. The animal welfare issues allerted authorities, which highlighted  the false accounting and the final nail in his coffin was he hadnt paid the dividend to the original investors. Shoddy small holder ended up in prision for the fraud. And the land he occupied is still up for sale with a high price and claw back clause tied to the land.
Now I know you all wouldnt knowingly mistreat an animal but the point I would like to make is that you have to keep neat accurate records if you are bringing in several streams of income.
Im going to appoint a accountant recomended by the NFU this year I can keep accounts and submit returns myself but want the legitamacy of a proffessional accountant when I start applying for for my agricultural planning.
foodhero