Ensure your farm business is a separate one

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With the application window for the 2018 Single Application currently open, current farm businesses, and farmers wishing to set up a new farm business, should be aware of their obligations in relation to business separateness.

In line with EU Regulations, DAERA has controls in place to ensure that, as far as possible, each Business ID is allocated to an independent and separate business both in status and in practice.

DAERA also performs a number of inspections and cross checks after establishment to ensure that farm businesses remain separate. In 2018 and beyond DAERA will continue to look at farm businesses that are identified as having an association and farm businesses may be asked to demonstrate that each of the associated farm businesses are separate.

The Department reserves the right to refuse or revoke a Business ID where we consider that two or more businesses are not separate.

Legal Status

If a business is to qualify as a separate and distinct entity, it must have a separate legal status. Satisfying this requirement is not in itself sufficient to establish separateness, as the other three criteria also need to be considered.

Economic Structure/Organisation

This relates to the economic control and functioning of the business. Relevant to this is:

qthe shareholding or partnership interest or voting rights of the directors, shareholders, partners or individuals (or legal persons) of all those involved in your business;

q those who benefit from the profits or suffer the losses relating to the business; and

q those who have ultimate responsibility for making the longer term policy decisions that will affect the profitability of your business.

How your business is financed (including the nature of any loans and guarantees) and land tenure arrangements may also be considered, including any reliance on, or linkages to, other businesses.

Commercial Arrangements

This relates to commercial structure and concerns the commercial independence of a farm business. Information, which is relevant, may include whether:

q the person with day-to-day responsibility for managing the business has discretion to buy and sell;

q there are separate accounts and tax status, whether all transactions are carried out at commercial rates;

q there are separate bank accounts and whether the financial transactions through these accounts and all taxation returns are appropriate to the size and nature of the business and clearly linked to its operations.

Operational Separateness

This relates to the separateness of cropping, stocking, feed, fertiliser, stock housing, machinery, labour, land for grazing, livestock records, farm plans, registration, herd marks etc. of a business. In particular, any herds/flocks must operate completely independently of any herds/flocks belonging to another business.

It is expected that each farm business ID will normally be able to demonstrate the following:

q separate farmyard, housing and handling facilities for animals;

q herds/flocks not mixing with animals belonging to another business ID;

q separate machinery (sharing of machinery that would typically occur between separate farms is acceptable but not to such an extent that one business is highly dependent on another business for machinery or in practice there is one set of machinery for both businesses);

q feedstuffs, silage and other inputs are sourced independently and stored separately from that of another business;

q there are normal commercial trading arrangements for transfer of animals and purchase of inputs and capital equipment including with other farm businesses and

q separate legal status (e.g. the business has separate accounts).

The Department must be satisfied that each business meets all four aspects of the separateness test outlined above. If the business cannot provide sufficient evidence they will be advised to merge.

Farm businesses that are genuinely separate should be able to demonstrate their separateness with relevant ease.

The vast majority of farm businesses will therefore have no difficulty complying with these requirements.

Potential difficulties can arise where applications are received from close family relatives for business IDs which relate to what might be described as the ‘family farm’.

Where the Department finds that two businesses are associated and appear not to be managed independently, we will ask for evidence that they are operationally separate.

For further information on assessing if your farm business is separate from another farm business you should refer to the DAERA guidance on ‘DAERA identification numbers for business customers, herd and flock keepers’ which is available on the Department’s website at: http://www.daera-ni.gov.uk/publications/daera-identification-numbers-business-customers-herd-and-flock-keepers

Further information in relation to merging a farm business is available at: http://www.daera-ni.gov.uk/publications/2018-guide-business-change