There are a number of differences between an ordinary farm partnership and a Registered Farm Partnership (RFP), but these arrangements can often cause confusion among farmers.
IFAC’s Trevor Boland and Philip O’Connor shed light on their subject during their recent appearance on Teagasc’s Beef Episode podcast, presented by Catherine Egan, which focused on the transfer of the family farm.
As Boland explained, an ordinary farm partnership may have been known as a joint herd number up to now, but occasionally, there is some confusion or a lack of clarity about what a joint herd number is.
“As far as we are concerned, a joint herd number is a partnership and should be registered with Revenue,” he explained to Egan.
The difference, he outlined, in terms of a registered farm partnership is that it is also registered with the Department of Agriculture, Food and the Marine.
“Both names are on the herd number, and you can actually bring two herd numbers, where maybe the younger generation comes in with their own herd number, and the older generation has their own herd number, into the RFP.”
“You can also have the possibility of two neighbouring farmers, as it is not always the family farm set up, going into an RFP to get the benefits.”
“With two herd numbers going into the RFP, you hold onto your ANC payments with each herd number, you may have two ACRES schemes, and it is a more formal structure that is registered with the DAFM.”
“It is also registered with the Revenue Commissioners, but it is the formal structure that is registered with a partnership agreement drawn up and an on-farm agreement drawn up. Then, you are entitled to all the benefits that the DAFM is pushing out there in terms of schemes.”
Young Farmers’ Top-Up
His colleague, Philip O’Connor, added that he is aware of cases over the years where parties have formed a joint herd number to attain the Young Farmers’ Top-Up, for example.
“When you claim a YF Top-Up and the National Reserve as a young farmer, it dictates that you must sign a document to say you are in control of the business, you are actively involved, you must also use a joint bank account to put the transactions through.”
“All of those would be indicators that you are forming a partnership. So our point of view, you have already formed a partnership, you have already claimed the schemes, you need to form a joint herd number in a specific way to make sure you are not causing any issues with the DAFM.”
“So you are already 99% of the way there in terms of what you are doing, so our point has always been, why not register it and formalise it correctly with the DAFM and, therefore, there are no issues.”
Also, he said there have been issues where people have formed a joint herd number, where they were not aware of the implications, and farmed through the sole trader’s bank account.
He continued: “The DAFM conducts an inspection and goes ‘, you have claimed Young Farmers’ grants, and you are not lodging or using the joint bank account, and therefore, you have inadvertently broken the scheme’s rules’.”
“Also, under the old rules in TAMS, and it may be the same when we get the new rules, every farm was entitled to 40% of €80,000 of a spend, and if you went into an RFP, even with one herd number, you got 140% of €160,000.”
“If you had a young farmer in it, they get their 60%, so that was 60% of €80,000 and 40% of €80,000, so it allowed the doubling up.”
“As we all know, the cost of building is substantial, so you would be surprised how a piece of capital work could eat up €80,000 quickly so that doubling ceiling really gave benefit to farmers,” he concluded.