Registering small farm as business

fizzypish · 28-08-2023 8:22am #1

Hi Folks,

The father has less than 30 acres at home. Trees planted on over half of it. I recently built a house beside him so am doing a few bits round at home. General maintenance and upgrading a shed to a workshop. All for personal use. My father has always been awful at dealing with the admin side of things so I'm looking after grant applications. All that's grand. My question: Is there any point in registering the farm as a business so I can claim the VAT back on stuff I buy related to it? E.G. this year I've purchased numerous tool, ran SWA cable to a shed and various other bits and pieces of maintenance. My gut is telling me that the cost of the accountant and various other costs involved could equate to the VAT savings. Also, unless I'm mistaken, the savings aren't monetary savings, you just get to buy more "farm stuff" instead of giving the government VAT. Not a bad situation to be in either I suppose.....

Anyway, with the little info I've provided, do ye think I should call up an accountant and get the ball rolling on registering the business for the father?

Cheers,

Fizzy

Calahonda52 · 28-08-2023 8:44am

what level of annual sales are made from the farm?

green daries · 28-08-2023 8:47am

https://www.boards.ie/discussion/comment/121036732#Comment_121036732

No none whatsoever. But ye can claim vat back already on fixed equipment etc and fencing water troughs all that type of stuff but it can't be for realpairs/parts

fizzypish · 28-08-2023 8:51am

https://www.boards.ie/discussion/comment/121036732#Comment_121036732

The only money comes from payments from the forestry company (Maybe 3-5k a year I think) and grants through the BISS scheme (Maybe 2-4k a year I think). There are no animals on the land. There's under 8k coming in total to the father for definite.

timple23 · 28-08-2023 7:03pm

For the work you have undertaken on the farm, are you submitting them as expenses when doing annual farm accounts so as to reduce the profit and therefore reduce the farm's tax bill?

Here are some articles.

https://www.farmersjournal.ie/money-mentor-to-register-for-vat-or-not-597468

https://www.irishexaminer.com/farming/arid-20175725.html

https://www.independent.ie/farming/legal-advice/what-are-the-pros-and-cons-of-registering-for-vat/34205607.html

fizzypish · 29-08-2023 7:57am

https://www.boards.ie/discussion/comment/121039667#Comment_121039667

My simplistic thinking is I'm spending a bit of money on upgrading a shed, maintenance of an old tractor, some work adding back ditches (Eco stuff) and general land management. Maybe I can claim back the VAT? From what I'm reading I don't think thats the case.

Donald Trump · 29-08-2023 9:07am

You can basically claim VAT back on fixed items. There is a minimum you need to hit though. It is possible you can claim the VAT back on your "reclamation" work. Might depend on what you are doing.

Upgrading your shed is similar. Depends on what you mean by that.

There is additional paperwork if you are registered. And VAT then needs to be paid (by you, to Revenue) on some of your sales.

timple23 · 29-08-2023 8:38pm

https://www.boards.ie/discussion/comment/121041016#Comment_121041016

Are you spending the money or is your father spending the money? You're asking about registering for vat, which could be considered as asking how can you reduce your tax bill. I would look at putting all those expenses in under the farm expenditure for the year, are you doing this? As this will reduce your profits and reduce your tax bill.

Bass Reeves · 29-08-2023 8:43pm

It would not be worthwhile registering for vat. However as @green daries said asan unregistered vat business you can claim vat back on fixed equipment. For example in your original post you mentioned SWA cable which I presume was to put electricity into a shed. Therefore as anew addition a fixed item you could claim that back as any other electrical fittings you used on that project.

All the rest can be depreciates as well as the remaining value of vat claimed items.

MIKEKC · 29-08-2023 10:53pm

https://www.boards.ie/discussion/comment/121044230#Comment_121044230

If the price of milk stays as it is will dairy farmers that are in the 100-150 cow. bracket regret going the company route?

green daries · 29-08-2023 11:30pm

https://www.boards.ie/discussion/comment/121044793#Comment_121044793

Nope

CramCycle · 29-08-2023 11:37pm

For the size of the farm, I just can't see it being worth the effort unless you don't value your time. You'll have to remain VAT registered for at least 3 years after your last big saving, so regular returns etc. When you can just already save VAT on the big fixed asset farm expenditures anyway.

MIKEKC · 30-08-2023 10:15pm

https://www.boards.ie/discussion/comment/121044920#Comment_121044920

Not much information in your answer. They must be making big money still.

green daries · 30-08-2023 11:31pm

https://www.boards.ie/discussion/comment/121049194#Comment_121049194

You asked I answered.......

Bubbles2323 · 02-09-2023 9:19pm

Gents, if one has a Ltd company already not agri related, is it possible to put the farm under this Ltd company as its registered for VAT?

green daries · 02-09-2023 11:00pm

It may be but you will loose the 5.4 percent vat paid on farmer sales revenue may have a dim view of you bringing your farm under an Ltd umbrella ....I've heard of it being done but can be problematic 🤷..... as always a really good accountant who knows what they are talking about

Bubbles2323 · 04-09-2023 6:39pm

Thanks Green Daries, think it would be worth looking into for me.

Cheers

Registering small farm as business

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