FARMING PARTNERSHIPS
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View from Hanbury church in Worcestershire, setting for the fictional village of Ambridge in The Archers
Farming partnerships: What you need to know Sally McFadden, lifelong fan of The Archers and Head of Commercial Property at Thomson Bancks, has many years’ experience in the commercial issues of rural life. Here she turns her attention to the opportunities provided by farming partnerships.
Anyone who follows The Archers will know that Brian Aldridge is considering setting up a family farm partnership to deal with the issues of land ownership and succession at Home Farm. Partnerships can protect the long-term interests of a farming family and help pass the business down through generations. However, as the Ambridge residents may soon discover, farming partnerships are complex and can raise a number of questions. Are all farm partnerships the same? Organisation of a farming partnership depends on the size and type of farm, the roles of family members in running the farm, and differences
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in capital contributions. In England, there are 3 types of partnership: • Traditional Partnerships: These are the most common and may or may not be formally documented. If nothing is recorded and there is no evidence to the contrary, the partners are entitled to share equally in the capital and profits of the farm business. • Limited Partnerships: As the name suggests these provide a way of limiting liability. At least one partner must manage the business and provide an unlimited liability to creditors, however the remainder of partners may restrict their liability to an agreed
sum; the downside is that they cannot take part in the management of the partnership business and so this is not always practical. • Limited Liability Partnerships: These are still unusual in farming circles, they resemble a limited company but have the organisational flexibility of a partnership. You need at least two members to take responsibility for dealing with the Companies House requirements for filing partnership accounts and so on. Members’ liability can be limited to the extent of their capital contributions, however unlike limited partnerships, members can still take part in management of the business.