4 succession planning tips for the family farm

4 succession planning tips for the family farm

Have you thought about succession and the long-term plans for your family farm?

Succession planning is all about working with your family and is an essential part of running your family farm – used to protect your assets, your business and your family.

This article follows on from the NFU Mutual ‘Succession Sunday’ which was held on 29 May 2016 to encourage members of farming families to get together start talking about succession planning and the long-term future of their farms.

As agriculture makes up the highest concentration of family businesses passed through the generations, it is no surprise that succession is a central management issue and is something farmers need to carefully consider.

When thinking of passing on the business, succession only really succeeds optimally when it is prepared for. It is important succession planning is seen not necessarily about retirement but as a process of creating a long-term plan for the farming business, its goals and a plan of how to achieve them.

Succession planning, particularly in family farms, however, can be a difficult challenge involving multiple generations and a desire to avoid conflict, which is why we have published this article: 4 succession planning tips for the family farm.

Start the conversation early

In our experience it is never too early for families to start having discussions about succession. This isn’t easy as it is a very emotive subject, but it is absolutely essential for all sides to get the ball rolling and start this difficult conversation.

This is the main reason for the recent campaign ‘Succession Sunday’ – to get farming families around the table and start planning to secure the future of the farming business. Insurance firm NFU Mutual, who coined the idea, found that only 40% of farmers currently have effective succession plans in place.

Similarly, a recent Farmers Weekly survey of 61 young farmers found that 70% do not have a succession plan in place, citing fear of offending and embarrassment to parents as the main reason for non-discussion.

The older you become the more difficult and risky succession planning becomes.

Getting the tax right

While tax should perhaps not be the main driver for succession, there are some important tax considerations when thinking about succession planning for the family farm. These also have legal implications. In particular, the two key tax implications to consider are Inheritance Tax (IHT) and Capital Gains Tax (GCT). The tax aspects of succession planning can be complicated and, as tax laws continue to change, it is essential that you seek sound and proactive professional advice in this area.

Financial planning and protecting your family

Pensions and investments can play an important part in succession planning for the family farm.

For example, will you have enough provision to support yourself after retirement? It is also extremely important to consider the impact of major life changes on the business. Birth, marriage, divorce or, in the worst scenario, death can all have a considerable effect on the family business, so it is essential to protect against potential damaging impacts as well as allowing for new opportunities. The need to have adequate financial security and protection in place cannot be overstated.

Again, it is essential you seek professional advice in this area.

Seek professional advice

As you can see above, seeking professional advice is very important when succession planning for the family farm.

Involving your accountant (and solicitor) at an early stage in the succession planning process means they can work together to help you identify options as well as potential pitfalls – including tax – to avoid.

As Hawsons have a team of dedicated agriculture accountants we are well-placed to work with your family, getting to understand your farming business and help you create an effective succession plan. Working closely with the experts from our in-house tax department and wealth management team, we can help you ensure that your succession plan is tax-efficient and takes into account all of your financial planning requirements.

If you are thinking about succession planning, please get in touch and book a free initial meeting with one of our experts.

More from our agriculture experts

You can find all of our latest agriculture sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Martin Wilmott is a partner at Hawsons

Martin Wilmott acts as lead engagement partner for a wide range of corporate and non-corporate clients in the Doncaster office, especially in the Legal and professional, agricultural, transport, property and construction, manufacturing, healthcare and hospitality sectors. For more information or advice on anything covered in this article please contact Martin on [email protected] or 01302 367 262.

Brexit: implications for rail, haulage, aviation and ports

Brexit: implications for rail, haulage, aviation and ports

Brexit: implications for rail, haulage, aviation and ports

It has now been over a month since the UK voted for Brexit and many business that operate in the UK transport and logistics sector may still be thinking about how Brexit may impact them.

In general, there is a balance between the common perceived benefits of EU membership (such as the single market for transport services which has brought down costs through liberalisation and competition) and the burdens (such as excessive and disproportionate regulation). A common question is how much Brexit will impact on the standards and regulations that the UK chooses to apply in the transport and logistics sector.

The likelihood is that, as the UK played a leading role in establishing those standards at a European level in the first instance, the post-Brexit landscape may not look vastly different to how it looks now. In this article we consider the potential challenges and opportunities for the UK transport and logistics sector following a Brexit vote.

We look at the impact on rail freight, haulage, aviation and ports.

The impact of Brexit on rail freight

Coal train

Investment

One of the key areas to consider following a vote to Brexit, from a rail point of view, is the government’s commitment to delivering on national infrastructure projects. As the sector is arguably the linchpin of the British economy, investing in strategic transport links is critical to our long-term economic growth. Earlier in the year the government committed to significant additional capital funding for UK rail networks.

But despite the years of planning and business lobbying, there are now concerns that the government may back away from its major transport projects in the wake of a vote to leave the European Union. The new Transport Secretary, Chris Grayling, has already reaffirmed his commitment to the high-speed HS2 rail project.

Whether or not the delivery of the multi-billion pound HS2 and HS3 schemes will go ahead no one really knows, but it is promising that the new Transport Secretary has given an early indication that HS2 will. The government had of course hoped to secure some EU funding for the project in the future, which is now highly unlikely to materialise. It will be interesting to see what happens in the 2016 Autumn Statement spending review, for rail projects, other infrastructure projects such as the third runway at Heathrow and the Northern Powerhouse.

Regulation

Depending on the terms the UK is able to negotiate post-exit, the UK Rail industry may move on from some of the European regulatory structures over coming years. For example, as large parts of the British railway system is owned by EU-based businesses, EU-based procurement laws may drop out of the picture. This may allow the UK government to award rail services and train building contracts to British-based companies.

In the short to medium term, it is unlikely that the rail industry will see any major regulatory changes, although one side effect could be a rise in regulated rail fares if Brexit leads to an upturn in inflation.

The impact of Brexit on haulage

shutterstock_231372367

There are potentially a lot of uncertainties for UK haulage as a result of Brexit, in terms of employment, drivers’ hours, access to markets and border controls.

Costs

As oil is sold around the world in US dollars, a weakening of the pound could have significant impacts on fuel costs. For hauliers, using vast amounts of fuel is unavoidable. Although fuel costs have been steadily creeping higher since hitting a 13-year low earlier in the year, there has not been a predicted sharp rise in the cost of fuel following the UK’s Brexit vote.

Fuel duty increases have been in the Treasury’s sights before and could now be again in the 2016 Autumn Statement. Fuel duty will have been frozen for 6 years at its current rate at the end of 2016/17.

Skills

One of the biggest impacts for hauliers following the UK’s decision to leave the EU could be on recruitment. A key threat to businesses in the road transport industry is that the UK is simply not attracting enough drivers.

This has been impacting the haulage industry for some time. As well as dealing with an aging workforce, following a vote to leave the EU, there may also be fewer drivers from the EU available to work for UK-based haulage businesses. Labour mobility issues are going to be at the forefront of many haulage business owners’ minds over the coming months and years. This is something that must be prioritised when post-Brexit negotiations begin.

Regulation

An exit from the European Union could lead to a reduction in legislative burden for UK hauliers and level the playing field against foreign hauliers. When the UK formally leaves the European Union, the UK government may have the freedom to implement stricter rules regarding the use of UK roads by EU hauliers. For example, the government could increase the HGV road user levy charge for EU hauliers (which was introduced in 2014), or it could remove the charge for UK Hauliers. It is worth noting, however, that this could see EU countries set a reciprocal charge for UK hauliers operating abroad.

The Driver CPC, which continues to divide opinions within the sector, could remain following Brexit as it covered by the European Agreement Concerning the Work of Crews of Vehicles Engaged in International Road Transport (AETR) – the set of rules that many non-EU countries have adopted and the UK is a signatory to. Brexit will, however, give the UK an opportunity to reform Driver CPC obligations and update the qualification.

In the short to medium term, it is unlikely that the road transport industry will see any major regulatory changes.

The impact of Brexit on aviation

Aviation

Passenger rights and compensation

Air carrier liability under the Montreal Convention for death or bodily injury and lost/damaged luggage would be unaffected, as the UK is a signatory to this agreement in their own right.

EU legislation dating from 2004 has led to an increased awareness of passenger rights and a willingness by passengers to enforce those rights and claim compensation. It is possible that there may be pressure from within the sector on the post-Brexit government to overhaul the current system; however, what any new system would look like, or how it would apply to non-UK airlines and passengers, is unknown.

Airspace

Across Europe, there are plans to increase capacity, improve safety and enhance the efficiency of the air transport network via the Single European Sky (SES) project. As non-EU states (such as Norway and Switzerland) are part of this project, it is likely that the UK will remain a party to SES even post-Brexit.

Cheap flights

We have all benefited from and got used to cheap short-haul flights across Europe, which owe a large part to the liberalisation of air transport across the EU and the single aviation market. Airlines will want the UK government to negotiate continuing access to this liberalised regime post-Brexit.

As far as access to non-EU markets are concerned, long established bilateral agreements with many important markets (such as Asia and North America) were superseded by EU third party agreements. This situation will need to be revisited by a post-Brexit UK government and potentially new agreements will these important partners will need to be renegotiated.

The UK may be unwilling or unable to replicate market access arrangements for airlines post-Brexit, which could lead to an increase in passenger fares and possibly fewer flights.

The impact of Brexit on ports

Haulage tax 2016

UK ports are largely privately owned and competitively run, which is a very different scenario to that of many other EU member states. The UK port sector has had concerns about public subsidiaries in other EU countries, and the consequential effect on competition for a long time.

Around 90% of UK trade is handled by ports with the EU being our largest trading partner. Any changes to the costs of trade with the EU are likely to affect the volumes and patterns of freight activity at UK ports.

Potential changes on customs checks may cause considerable congestion at UK and European mainland ports. If difficulties continue at Dover and Folkstone, this may give way to a positive knock-on effect for nearby ports on the East coast of England.

In summary

The real, practical implications of the UK’s decision to leave the EU will vary from business to business.

Exiting the EU will likely bring both opportunities and challenges for transport and logistics businesses – much of this, however, will depend on the terms that the government is able to negotiate post-exit. The new government must now seek to maintain economic stability in this period of uncertainty, before exiting the EU.

In the meantime, we will continue to monitor events closely and keep up you updated on key developments.

More from our transport and logistics experts

You can find all of our latest transport and logistics sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Paul Wormald is a partner at Hawsons, working in the Doncaster office. He worked previously with two national firms of Chartered Accountants prior to joining Hawsons in 2001. For more information or advice on anything covered in this article, please contact Paul on [email protected] or 01302 367 262.[/author_info]

Challenges for transport and logistics firms in 2016

Challenges for transport and logistics firms in 2016

Challenges for transport and logistics firms in 2016

Employing more than 1.8 million people across the UK and servicing nearly every other commercial sector, transport and logistics firms continue to be very important to the nation’s growth. Confidence remains cautiously optimistic in the sector with continuing government support and significant investments in the UK’s road and rail infrastructure; however, operators remain acutely aware of the challenges ahead.

This article summarises some of the key challenges facing the transport and logistics sector today and, as you will see, there is a really close relationship between the opportunities and the threats in this evolving sector.

Changing customer demands

As more and more sales are made online (more than 20% of non-food retail spending occurs online in the UK, according to a recent British Retail Consortium report) there is an increasing demand for vans to service home delivery. A greater focus in selling online leaves retailers with a challenge: how do they actually put goods in the hands of the customer?

This has implications for the way in which transport and logistics firms structure their fleets and is making some re-think their models. Today’s transport and logistics customers demand even greater flexibility and this presents opportunities for the sector to increase activity over the year ahead. It is certainly no surprise that retail and the related distribution and haulage sectors were the most optimistic about the year to come, as highlighted in the FTA’s Logistics Report 2016.

Cyber security and data protection

Advances in technology and improvements of online networks across the transport and logistics sector are creating some very exciting opportunities, reducing costs and improving speed and operational efficiency. Additionally, in the not too distant future, with significant advances in technology and software, driverless trucks and flying drones delivering products and supplying distribution networks could be a real possibility.

Whilst these are great for consumers (and operators), inevitably, with a greater reliance on technology the issue of cyber security is not going away, and attacks are becoming more sophisticated. Cyber security is absolutely relevant to transport and logistics firms and, as with physical threats, cyber threats need to be taken very seriously.

Now might be the time to review your data protection procedures and implement appropriate changes. With the new EU General Data Protection Regulation (GDPR) finally released, in April 2016, businesses will need to start planning ahead and preparing for the changes. Although the UK would not be tied down to the new rules, it is likely that, following post-exit negotiations, UK data protection standards would have to be equivalent to the EU’s GDPR framework. Firms will therefore still need to prepare for and start to comply with the new EU GDPR data protection rules, before the regulation comes into law in 2018. Find out more about the new GDPR data protection rules at www.hawsons.co.uk/new-eu-gdpr-rules

Skills shortage

In short, the UK is not attracting enough drivers and engineers to the sector and, as we have spoken about before, this is one of, if not the, biggest threat to transport and logistics firms today.

Many other sectors are experiencing skills shortage, including manufacturing and technology, but the transport and logistics sector has been particularly affected. The introduction of the apprenticeship levy (from April 2017), whilst bringing an additional payroll costs for large employers, is a positive development in this area. Much is being done to bridge the skills gap in the sector, but with no immediate remedy in sight and the age profile of the sector continuing on an upward trend, the skills gap may well continue to hamper economic growth.

Find more information on the skills shortage in the transport and logistics sector here.

Wage rate increases and low profit margins

Although the sector will not be one of the hardest hit following the introduction of the new National Living Wage and yearly increases in the National Minimum Wage, transport and logistics firms work with a number of suppliers who do employ large numbers of staff working on the National Minimum Wage, so the impact could well be indirectly passed onto increases in supplier prices in the coming years and months.

The new apprenticeship levy also brings a new substantial payroll cost for larger operators from April 2017. Even despite the price of oil falling, rises in wage rates means that the transport and logistics sector remains largely unchanged, and is still very much a low margin activity.

More from our transport and logistics experts

You can find all of our latest transport and logistics sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Paul Wormald is a partner at Hawsons, working in the Doncaster office. He worked previously with two national firms of Chartered Accountants prior to joining Hawsons in 2001. For more information or advice on anything covered in this article, please contact Paul on [email protected] or 01302 367 262.[/author_info]

Advice on buying or selling a care home – key considerations

Advice on buying or selling a care home – key considerations

Advice on buying or selling a care home 

If you are about to purchase a new care home or embark on the sale of an existing care home, this article is a worthwhile reminder of some of the key accounting and tax-related considerations you should be thinking about.

Buying a care home considerations

The care home sector presents potentially lucrative business opportunities for those with sufficient capital to invest. The first port of call if you’re looking to purchase a care home is to carry out financial due diligence; a process done to assist a prospective purchaser (and/or funder) to make an informed judgment as to whether to proceed with a proposed transaction or not.

The due diligence will cover all relevant aspects of the past, present and forecasted future of the care home and include things such as historical trading results, accounting policies, projected cash flow, tax computations and key business weaknesses. The amount of due diligence conducted will be dependent on a number of factors, including the experience of the buyer, the size of the transaction, the funding structure for the acquisition and the risks involved.

Once a financial due diligence has been conducted and the buyer is satisfied with the price/risks, the buyer will need to seek advice to structure the transaction in the most tax efficient way. Transactions tend to have complex tax implications so this is an extremely important part of the purchasing process.

Selling a care home considerations

If you have been waiting for a healthy environment to sell your care home, then now may be a great opportunity to realise best value…but, as with many aspects of business life, having a plan of how you are going to exit your business and executing that plan over a period of time generally leads to a better outcome than when things are dealt with in an ad hoc way.

From a tax perspective, there are many aspects to consider, including Entrepreneurs’ Relief, Capital Gains Tax and Inheritance Tax.  You may also wish to restructure the business to save tax and take advantage of a potential more beneficial tax position. Additionally, as the buyer is likely to conduct a financial due diligence investigation it is important that all of your financial information is accurate, up-to-date and presented in the best possible light for your care home.

Get yourself organised early and put yourself in the buyer’s shoes. This often makes the selling process more efficient, cost effective and secures the best sale price – you often only get one chance to get it right. Away from the accounting and tax-related considerations, it is important to think about the full spectrum of business issues when selling your care home, including marketing, administration, room cleanliness, employee engagement and working procedures.

Even the smallest changes can reap the rewards and help you to differentiate from other care homes on the market.

How we can help

As well as the technical excellence you would expect from a firm of chartered accountants, here at Hawsons we have dedicated teams of corporate finance and tax specialists who have extensive experience in the processes of buying or selling a business.

Buying a care home

We have the flexibility to tailor our services whilst being able to offer a full deal advisory service including, identifying targets, initial approach, negotiation of terms, due diligence, tax efficient structuring and raising finance.

Selling a care home

The sale of a business is often the culmination of a lifetime’s work. This will usually be a once in a lifetime transaction – with only one opportunity to get it right and achieve the maximum reward.

Expert advice should therefore be sought at the earliest opportunity. At Hawsons we have recently launched an exciting new exit planning service and, alongside the new service, we have set up a free-to-use “business attractiveness” test to help business owners find out how attractive their business is to a prospective buyer and identify any areas where the business can be improved to increase its value.

For care home owners looking to sell, this could be a particularly important tool for managing and streamlining the sales process, as well as maximising the best price for your care home.

Find more information about our business attractiveness test at: www.hawsons.co.uk/exit-planning

More from our care sector experts

You can also find all of our latest care sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Scott Sanderson

Scott Sanderson Partner

Scott Sanderson began his career with Hawsons and trained as a Chartered Accountant, becoming a partner in 2015, specialising in the healthcare sector and small businesses. For more details and advice, please contact Scott on [email protected] or 0114 266 7141.[/author_info]

Challenges facing charities and trustees in 2016

Challenges facing charities and trustees in 2016

Challenges charities and trustees face in 2016

Many charitable organisations are being tasked with doing more with less, resulting in increasing pressures for trustees. The charity sector is clearly facing challenging times, and this article summarises some of the key challenges facing the charities and trustees today, including Brexit and cyber security.

Risk management

How trustees can identify, assess and manage risks to their charity is a key challenge. Effective risk management is of greatest importance to every organisation – to safeguard assets and funds and ensure sustainability – and particularly for those that operate in the charity sector. There is a requirement for trustees of charities that have their accounts audited to also include a risk management statement in their trustees’ annual report.

The new charity SORPS also reinforce the importance of the risk management statement. One of the key challenges in the new SORPs is that there is now a greater emphasis placed on identification of the risks and uncertainties faced by charities and how those risks will be managed. In order for trustees to make this positive risk management statement they will need to consider the risks the charity is exposed to and their risk management procedures.

Brexit

Now Brexit is confirmed, many charities and non-for-profit organisations may be thinking about how the UK’s exit from the European Union may impact them.

The impacts for the charity sector on the back of Brexit will of course be wide ranging, depending on how individual organisations raise their money. As for many UK businesses, with so many questions remaining unanswered, it is difficult to predict what may happen over the coming months and years.

Most charities, however, will be rightly concerned about any negative impacts to the UK economy that Brexit will bring and how that will in turn impact the charity sector. Charities could face a triple setback, with potential falls in donations, cuts in government funding and the loss of EU funding. On the flip side, we also look at how an exit from the European Union could bring about some positive changes for charities and not-for-profit organisations.

Find more information on the implications of Brexit on the charity sector here.

Fraud and cyber crime

No sectors are immune to fraud and the charity sector is no different. Fraud is one of the biggest challenges charities are facing and with almost 1 in 10 charities (with income of more than £100,000) reporting fraud and an annual cost to the UK charity sector of £1.65bn, it is essential trustees understand their risk exposure and do all they can to mitigate vulnerability.

Today’s charities run in the most digital era in history, with technology having a very positive impact on the way charities operate on a day to day basis. Charities will, however, inevitably find themselves more vulnerable to cyber breaches in the years to come, and need to be prepared for such attacks.

The growing emergence of cyber risks is a significant area of concern for charities and organisations must implement robust internal standards and procedures to ensure that criminals do not undermine their financial standing. As well as the financial impacts this can have, charities must also not lose sight of the reputational damage that can be caused.

Fraud and cyber security can be a tricky area to understand, but is one than charities must take very seriously.

We have a great deal of experience in helping charities detect and prevent fraud, so if you’re looking for advice in this particular area please do get in touch.

Recruitment and retention

Trustee recruitment is arguably one of the most important governance challenges that any board at a charitable organisation is likely to face. Trustees are the people who lead charities, the people who decide how the charity is run and, ultimately, the people who safeguard the charity’s future. It is therefore absolutely essential that the process of trustee recruitment is one that is carefully planned and thought-out, but it can be a detailed and complex process.

Find more information on trustee recruitment here.

Managing the charity’s finances

It is essential that the charity’s trustees have a good knowledge and solid understanding of the charity and its finances. Understanding and managing the charity’s finances is a vital part of a trustees’ role and is part of their legal duty.

Determining the role of a trustee is a very serious matter for any charity’s board of trustees and, although keeping of top of the charity’s financial information can sometimes be a detailed and complex process, even the smallest charity needs to implement proper financial management. There are a lot of things to consider when managing the charity’s finances, but getting basics right is an absolutely essential part of good governance. Support it is out there and it can be a very cost-effective way of ensuring effective financial management.

Minimising the VAT burden

One particularly complex area of managing the charity’s finances are the challenges relating to tax and VAT. VAT is a constant focus in the sector and presents a wide range of different challenges and issues for charities.

The VAT reliefs available to charities are detailed and tightly defined, which is why it can sometimes be a complicated process. Even for very small charities, the area of charity VAT can be a very complicated area and is an area where professional advice is strongly recommended.

More from our charity experts

You can find all of our latest charity sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Simon Bladen Partner

Simon Bladen is the partner responsible for looking after the firm’s legal clients and has worked at Hawsons throughout his career. For more information or advice on anything covered in this article, please contact Simon on [email protected] or 0114 226 7141.[/author_info]