Help! Advice wanted on running sheep with new partner

[Hammerpond]

Hi All,

First post here after stalking for a long time. So I wondered what people's thoughts were on how my man and I should manage our farming business together because it's causing a bit of friction. Let's call my man D.

So, when I moved in with D 2.5 years ago I had to sell most of my sheep and then have built up slowly. He was running 200 ewes and 100 ewes for his landlord as payment for running his lambs. So just paying a headage on the ewes. Anyway, so I came along and I've been capped at adding 100 ewes, which I've roughly stuck to. He's been increasing the numbers gradually. I didn't mind at the beginning but it's all gone sour with his landlord so now he can only run 150 ewes on his bit of grazing (with that looking to get decreased) as opposed to 500. My winter grazing that I retained has gone from strength to strength so I was running 300 ewes for 6 months in the winter, which has increased to 700. I've found some summer grazing too for some ewes so I feel like I'm the one bringing more to the acreage side of things now.

To mark up which ewes/lambs were mine I've been notching them but it relies on them getting notched at birth. This doesn't always happen when you're tired, they're born outside or if D is ringing/notching the lambs. Then the notches have to be counted at market which keeps not happening. We end up just plucking a figure out of mid air. I feel really petty going, "That's mine," "That one," "That one too." and short changed financially. So, what I was ideally looking for was to run the sheep 50/50.

This wouldn't be an issue but for D to keep his farming and non-farming business separate he entered into a partnership with his Mother about 5 years ago. In practice she gave him £10k to add to the business but so far hasn't had any 'dividends' of sorts. She just puts all her fuel through the partnership and anything else she can claim is farm related. She doesn't help on the farm. Last year after much disagreement we came to on the main farm running 33% me, 33% D, 33% D's mother's ewes. All the sheep off this farm would be run 50/50 between D and I.

My off-farm work involves shearing, contract shepherding, working at the market etc. so I've ended up buying some ewes at reasonable prices. D has bought lambs to the same sum I've spent on ewes so I thought we would just put them into the business together and sell 50/50. Only after we'd started selling the lambs did D turn round and ask if I'd counted all my notches once they'd been loaded onto the lorry.

Anyway in summary, I don't think they'd be any issue if everything was 50/50 but having D's mum as his partner complicates the matter. I don't see why it's my problem if she's part of D's 50% of the business. Or we could just pay her so much every year as a dividend, like renting the ewes off her?

What are your thoughts TFF? I think a third of the lambs from 300 ewes is too steep a payment for £10k when D and I will be footing all the costs and putting the labour in. Is it actually not my problem? Or should I just run all my land separately?

I can see you all suggesting an ag pre-nup of sorts!

Thanks,
H

 

[Muddyroads]

Can you pay D’s mother the 10k back, and just have had as a silent partner in the business so she can claim her tax perks?
If the relationship is to become “permanent“, will you just pool resources and go halves on everything?

 

[Tim G]

I think the relationship and the businesses would be better kept separate.

 

[betweenthelines]

If you need a written agreement in a relationship, you really shouldn't be together.

Just my opinion

 

[Tim G]

If you need a written agreement in a relationship, you really shouldn't be together.

Just my opinion

Agreements are needed when/if it goes wrong.

 

[farmerdan7618]

Run your own as a sole trade and keep separate, too many issues to navigate for a successful partnership. Business needn't affect your personal relationship.

 

[bobajob]

This answer might not be what you want to hear, and I apologise in advance.... but can you not decide whether this partner is for the long term / forever..
Then there is just (his and) your sheep in one flock and the mother in laws sheep.
I just had a quick read of it but it seems a complicated arrangement!
Why not join it all up into one flock, economies of scale, more efficient and it would feel like a proper partnership and commitment with your other half, and it would simplify your business. (Get a written agreement with him)

 

[DrWazzock]

In my view you either have to accept that you all need to work as one partnership or go your separate ways business-wise otherwise its going to get far too complicated and resentment will only build. Form a proper partnership and get a decent accountant to work out what each partner has contributed to the partnership in terms of “capital introduced”, e.g the sheep contributed by each partner and mothers £10k, then work as one partnership splitting the profits however you see fit. That way at least everybody’s initial capital contribution is recorded and can (hopefully) be paid out if it goes wrong. Carrying on as you are is just too complex and must be an accounting and tax nightmare. Speak to a useful accountant and solicitor to draw up a proper partnership agreement or get out and keep your businesses largely separate would be my view.

 

[Frodo]

There are a few issues there, but if one is identifying your lambs, why not tag the at birth and invest in eid.

 

[tepapa]

This all seems quite complicated.
Personally I'd keep my flock separate especially if you now have a separate block of land. Manage the flock however I like and keep whatever breed I want.
There might be a time when you can rent land between each other if you have excess grass. But trying to keep tabs on who's lambs are who's and getting the correct value for your lambs seems like it's a hard way to go about it.

As for the mother in law's tax breaks, it doesn't sound very legal so I'd want to distance myself from that. I'd want to pay that back pretty quickly to get her out of the picture.

 

[BELOWAVERAGE]

Split the ewes for a month at tupping, put yours to a suffolk, his to a texel, his mothers to an oxford, no need to notch then, simple to sort.

 

[Hammerpond]

Hi everybody,

Thanks for your opinions. I think I knew what you were all going to say but I was trying to convince myself otherwise! Needed a bit of a kick up the backside. So we had a big serious discussion and we've actually agreed to split it 50/50. Hoorah! His partnership with his Mother is going to stay as his part of the 50%. We've both worked out who's bringing what to the business and how to even it out so we at least start with the same amount in the kitty.

We tried using different rams but the ewes are so various.

If it needs writing down formally then I'm with you that we shouldn't be working together! Bit too complicated running it separately: borrowing the livestock box, trailers, tractor use etc. If it all goes sour I'll have to anyway!!!!

Thanks guys

 

[Muddyroads]

Hi everybody,

Thanks for your opinions. I think I knew what you were all going to say but I was trying to convince myself otherwise! Needed a bit of a kick up the backside. So we had a big serious discussion and we've actually agreed to split it 50/50. Hoorah! His partnership with his Mother is going to stay as his part of the 50%. We've both worked out who's bringing what to the business and how to even it out so we at least start with the same amount in the kitty.

We tried using different rams but the ewes are so various.

If it needs writing down formally then I'm with you that we shouldn't be working together! Bit too complicated running it separately: borrowing the livestock box, trailers, tractor use etc. If it all goes sour I'll have to anyway!!!!

Thanks guys

Good luck. Hope it all works out.

 

[RedMerle]

This all seems quite complicated.
Personally I'd keep my flock separate especially if you now have a separate block of land. Manage the flock however I like and keep whatever breed I want.
There might be a time when you can rent land between each other if you have excess grass. But trying to keep tabs on who's lambs are who's and getting the correct value for your lambs seems like it's a hard way to go about it.

As for the mother in law's tax breaks, it doesn't sound very legal so I'd want to distance myself from that. I'd want to pay that back pretty quickly to get her out of the picture.

Absolutely. Surely you can only deduct expenses that are legitimately caused in the running of the business. Otherwise it is not paying back the money she lent and is also making the profit look artificially low. If youte paying less tax than you should then it could be dodgy ground?