Taking your equestrian interests to the next level and creating a business need not be daunting.
Hazlewoods Farms and Estates team encompasses a specialist equestrian team. The team have 30 years’ experience of working with and advising farmers, landowners and equestrian businesses with their accounting, taxation, and business needs.
THE BUSINESS STRUCTURE
What is your business going to look like, what are your income streams, what are your expenses and how are you going to make money?
- Establishing the best trading structure for your business
- Sole trader
- Partnership
- Limited liability partnership (LLP)
- Limited liability company (Limited company)
Each structure has different benefits and there is no set answer, the best structure will depend on your business.
10 OTHER AREAS TO CONSIDER
- Registering with the relevant authorities, HMRC/Companies House.
- A partnership or shareholders agreement prepared by a solicitor. It is far easier to agree terms at the outset, the agreement will provide clarity around ownership, profit allocation and what happens if someone wants to leave or dies.
- Are lease/rental agreements required? Ensure you understand the terms and that they are in the correct entity.
- Banking and funding requirements. Open a business bank account for everyday transactions. If you are looking for funding, a business plan and trading projections are likely to be required.
- Do you need staff? Are your workers employees or self-employed?
- Payroll requirements
- Pension requirements
- Benefits in kind
- Ensure you have adequate insurance in place.
- Do you have business rates to pay? The agricultural exemption does not apply to most equine businesses.
- VAT. The VAT treatment of equestrian businesses is complicated. Some supplies are zero rated, some exempt, some taxable. Most equine businesses have a mixture of more than one.
- Bookkeeping requirements. Making VAT digital is already in place, you require accounting software to be able to submit VAT returns directly to HMRC. Making tax digital for income tax self-assessment for self-employed businesses is due to commence April 2024. It is the Government’s intention to extend this to all businesses.
- What are the tax implications of your business now and in the future? Income tax/corporation tax/capital allowances/inheritance tax/capital gains tax/national insurance, are you anticipating any losses, if so, how can these be utilised?
CASE STUDIES
Succession planning for a family farming and equestrian business
Hazlewoods advised on and implemented a structure involving partnerships which allows the flexible use of income profits and losses around the family. The land-owning member is an active partner in both partnerships allowing a situation where valuable assets can be gifted to the next generation at the appropriate time without incurring substantial capital gains tax or inheritance tax charges.
Structure for riding school facing VAT registration
The existing trading structure meant the riding lessons given were generally subject to VAT. Hazlewoods provided advice and assisted with the implementation of a new trading structure using a limited liability partnership.
Competition and training facility requiring funding
Hazlewoods helped the client establish a clear trading structure and business accounts and projections to assist with funding applications. The team advised on a tax efficient structure for the land ownership, lease arrangements and borrowing within the entities, tailored to the client and acceptable to the lenders.
HOW HAZLEWOODS CAN HELP YOU:
- Advice on the choice of accounting software and its operation
- Preparation of annual accounts and tax returns
- Strategic business and tax advice
- Payroll and PAYE matters
- Assistance with business plans
- Business valuations
- Capital gains tax (CGT) planning
- Inheritance tax (IHT) planning
- Capital allowances
- VAT advice
- SDLT advice
- The tax implications of diversification
- Trust advice
- Introductions to other specialist professionals
Partner, Lucie Hammond, heads up the Equine team and has been in practice for over 30 years. With a keen interest in the equestrian sector, she is able to provide pro-active, practical advice and solutions covering business structuring, income and capital tax planning. If you need support with your equine business structure, please do get in touch below.
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