Year end valuation

[beltbreaker]

I had a chat with a mate today about year end valuations. Both of us despite being 30 years in the job are pretty niave doing this. As I expect to make a £ I wonder if I am doing it to my benefit or not.

For growing crops it's contractor costs plus variable costs to date.

For crops in store it's value of the crop on day of valuation via AHDB website. However mate seemed to think different

The old man used to get the mart to do a valuation but I have done it for ourselves for 15 odd years.

Thoughts greatly appreciated.

Also is there any difference between a Ltd company valuation and a partnership?

 

[neilo]

Value of crops in store can be done either of two ways I think. Either COP or 75% of market value (use whichever is lowest, obviously).

Your accountant should surely advise on that, it’s based on set percentages?

 

[Two Tone]

I’ve been gathering all the information for our S&V today. Our EoY was last Wednesday.

Quite how you value crops that might need replanting I don’t know.
Obviously the investment in seeds and sprays have been made.
But at the moment, I do not know whether some of the dodgier bits will make it or not.

One thing that has surprised me is the increase in the value of Pre-em sprays, compared to the previous year, despite the drop in price of most products. But Crystal DFF on the increased Barley acreage has cost us more that the Luxinum Plus on the lower wheat acreage.

Pre em Nirvana cost on Beans is unbelievable compared to the Avadex followed by Centurian max on the former Winter Linseeds. Thank God we won’t be growing any more of either in favour of AB6 from this harvest.

Fertiliser values are less than half what they were.

One is never sure if we want a higher of lower valuation each year.


I treat our meeting with our S&V Valuer as one of the most important meeting of every year. So I make sure I get absolutely everything ready before he comes so that we can discuss strategies for the year ahead.
The paperwork/Word file I give him he can just copy and paste into what he will send back, after checking and altering what he for instance, would value the unsold grain used as HSS.

This gives us 95% of the time to chat about far more important things.

 

[neilo]

I’ve been gathering all the information for our S&V today. Our EoY was last Wednesday.

Quite how you value crops that might need replanting I don’t know.
Obviously the investment in seeds and sprays have been made.
But at the moment, I do not know whether some of the dodgier bits will make it or not.

One thing that has surprised me is the increase in the value of Pre-em sprays, compared to the previous year, despite the drop in price of most products. But Crystal DFF on the increased Barley acreage has cost us more that the Luxinum Plus on the lower wheat acreage.

Pre em Nirvana cost on Beans is unbelievable compared to the Avadex followed by Centurian max on the former Winter Linseeds. Thank God we won’t be growing any more of either in favour of AB6 from this harvest.

Fertiliser values are less than half what they were.

One is never sure if we want a higher of lower valuation each year.


I treat our meeting with our S&V Valuer as one of the most important meeting of every year. So I make sure I get absolutely everything ready before he comes so that we can discuss strategies for the year ahead.
The paperwork I give him he can just copy and paste into what he will send back, after checking and altering what he for instance, would value the unsold grain used as HSS.

This gives us 95% of the time to chat about far more important things.

Surely unsold grain used as HSS is worth what you could sell it for (and you can’t sell it as seed remember) x 75%.

My YE is March 31st, but I never do the valuations until several months later. That way I know exactly how many lambs, bales or tons of grain were sold in the following months, and what they made.
Why the rush to get it done?

 

[Two Tone]

Surely unsold grain used as HSS is worth what you could sell it for (and you can’t sell it as seed remember) x 75%.

My YE is March 31st, but I never do the valuations until several months later. That way I know exactly how many lambs, bales or tons of grain were sold in the following months, and what they made.
Why the rush to get it done?

Yes, that is pretty much exactly how he does it. But I deliberately put it in at 100% sale value to give him something to do, so as to justify his bill to the Directors of the company.

Our most recently appointed Director, now suddenly about to become Managing Director/Chairman since his father’s recent passing, started attending our S&V meeting last year (His Dad never did!). He found it one of the most fascinating and fact finding meetings he has ever been to in his life. Which IMO is brilliant and exactly what I have been looking forward to in working with him.

Ironically the previous year was exceptionally good with high crop values grown with pre-Ukrainian price hike growing costs, especially fertiliser. That high fertiliser cost hit us this last year.

The Valuer and I reminded ourselves that such good years were often followed by exceptionally bad ones. And that some farmers would have a potentially bad harvest, grown using very expensive Variable costs and a Tax bill still to pay the following January!

Yeah, though we shrugged our shoulders at the time, most of that turned out to be remarkably accurate, didn’t it?
And with a far from promising harvest ahead this year, thank God we are taking maximum advantage of a new AB6 CS scheme and SFI.

 

[AndrewM]

dont you just need to do it the same way each year, then it will just work itself out over the years.

 

[farmerm]

I’ve been gathering all the information for our S&V today. Our EoY was last Wednesday.

Quite how you value crops that might need replanting I don’t know.
Obviously the investment in seeds and sprays have been made.
But at the moment, I do not know whether some of the dodgier bits will make it or not.

One thing that has surprised me is the increase in the value of Pre-em sprays, compared to the previous year, despite the drop in price of most products. But Crystal DFF on the increased Barley acreage has cost us more that the Luxinum Plus on the lower wheat acreage.

Pre em Nirvana cost on Beans is unbelievable compared to the Avadex followed by Centurian max on the former Winter Linseeds. Thank God we won’t be growing any more of either in favour of AB6 from this harvest.

Fertiliser values are less than half what they were.

One is never sure if we want a higher of lower valuation each year.


I treat our meeting with our S&V Valuer as one of the most important meeting of every year. So I make sure I get absolutely everything ready before he comes so that we can discuss strategies for the year ahead.
The paperwork/Word file I give him he can just copy and paste into what he will send back, after checking and altering what he for instance, would value the unsold grain used as HSS.

This gives us 95% of the time to chat about far more important things.

When is your year end? Our March valuation doesnt go to the accountant until the Autumn, plenty of time to make adjustments with the benefit of hindsight, it that not allowed I only know the accurate amount of grain once it is all sold and this year like you make have some dodgy bits that don't make harvest and so really have no value.

I hadnt thought about it before but how does one do a valuation on SFI options, I have never though to put a valuation against the few acres of css options

 

[robs1]

dont you just need to do it the same way each year, then it will just work itself out over the years.

Absolutely, as long as it's done the same way it balances it self out, IIRC Tesco got caught out a few years boosting their profits by miss valuing stock or future sales or some such deliberate false accounting.

 

[DaveGrohl]

I wouldn’t get too hung up on this. When I was a youngun I would try to keep values high so that our accounts would "look good" and impress the bank manager.

Then I worked out that I was actually impressing the tax man instead.

Once I wised up it’s been low value stuff all the way. You never know, that pile of grain could become rotten before it’s sold. Or that winter crop could need to be ploughed out in spring cos it’s rotted in the ground and is therefore worthless. Or that stack of hay could go on fire and burn down the building it’s in. Or your entire cattle herd could get taken out with F&M. Meanwhile HMRC have said thank you very much.

Oh, and your accountant should make "suggestions" once the accounts are ready in any case before signing off…

 

[ewald]

I have always used a local agent to do the valuation - it is looking a bit expensive at a time when I am looking at costs.
Are there any problems doing it myself? I had heard that HMRC might look a bit sideways at it, the suspicion being that we are trying to hide something or manipulate the figures.

 

[Spencer]

I have always used a local agent to do the valuation - it is looking a bit expensive at a time when I am looking at costs.
Are there any problems doing it myself? I had heard that HMRC might look a bit sideways at it, the suspicion being that we are trying to hide something or manipulate the figures.

Fear spread by agents, crack on.

 

[David.]

I have always done my own on a honest opinion basis. The accountant can then tweak them downwards a bit if needed. As alluded to above, if you are right, HMRC won't find anything.
Everyone now has a 31.03 year end, going forward. This will mean for us that we actually have 15mths trading in this year.

 

[czechmate]

Absolutely, as long as it's done the same way it balances it self out, IIRC Tesco got caught out a few years boosting their profits by miss valuing stock or future sales or some such deliberate false accounting.

i am sure you must be mistaken

 

[Two Tone]

When is your year end? Our March valuation doesnt go to the accountant until the Autumn, plenty of time to make adjustments with the benefit of hindsight, it that not allowed I only know the accurate amount of grain once it is all sold and this year like you make have some dodgy bits that don't make harvest and so really have no value.

I hadnt thought about it before but how does one do a valuation on SFI options, I have never though to put a valuation against the few acres of css options

Our year end is 31st January. Would far rather it was the end of March.
SFI will be treated exactly the same as CS.
Any Cultivations and variable cost of the land used by SFI and CS, need to be shown to create a value.
They should be treated as any other land insofar that they will receive an income.

With regards unsold grain value or grain that hasn’t left the farm, just make as accurate guess as possible.
As for the dodgy sown area the same applies, except that the value of seeds, fertiliser and Spartans applied has to be shown and in effect spread over the whole area.

 

[Billboy1]

we've always done our own ( hasn't everyone got to align to march 31st end date now )?

 

[gatepost]

There is a HMRC guide to valuations, the important thing is to be consistent in the method chosen, ie 'deemed cost' which is what I use, what you don't want to do is end up paying tax on 'paper profits' , but at the same time you will eventually possibly have a tax liability on the difference between the 'cost' valuation and the subsequent sale value, if you can demonstrate that you have followed and stuck too an accepted method, no problem.

 

[Ramrod]

I wouldn’t get too hung up on this. When I was a youngun I would try to keep values high so that our accounts would "look good" and impress the bank manager.

Then I worked out that I was actually impressing the tax man instead.

Once I wised up it’s been low value stuff all the way. You never know, that pile of grain could become rotten before it’s sold. Or that winter crop could need to be ploughed out in spring cos it’s rotted in the ground and is therefore worthless. Or that stack of hay could go on fire and burn down the building it’s in. Or your entire cattle herd could get taken out with F&M. Meanwhile HMRC have said thank you very much.

Oh, and your accountant should make "suggestions" once the accounts are ready in any case before signing off…

 

[neilo]

I wouldn’t get too hung up on this. When I was a youngun I would try to keep values high so that our accounts would "look good" and impress the bank manager.

Then I worked out that I was actually impressing the tax man instead.

Once I wised up it’s been low value stuff all the way. You never know, that pile of grain could become rotten before it’s sold. Or that winter crop could need to be ploughed out in spring cos it’s rotted in the ground and is therefore worthless. Or that stack of hay could go on fire and burn down the building it’s in. Or your entire cattle herd could get taken out with F&M. Meanwhile HMRC have said thank you very much.

Oh, and your accountant should make "suggestions" once the accounts are ready in any case before signing off…

Crikey. To think Mrs NeilO says I can be a miserable bugger.

 

[DrWazzock]

dont you just need to do it the same way each year, then it will just work itself out over the years.

That’s what the Inland Revenue told me when I took the valuation job in house. Between myself and the accountant we sort it out with consistency. No point trying to fiddle it lower to reduce profit as it will catch you out one way or another.

 

[farmerm]

Our year end is 31st January. Would far rather it was the end of March.
SFI will be treated exactly the same as CS.
Any Cultivations and variable cost of the land used by SFI and CS, need to be shown to create a value.
They should be treated as any other land insofar that they will receive an income.

With regards unsold grain value or grain that hasn’t left the farm, just make as accurate guess as possible.
As for the dodgy sown area the same applies, except that the value of seeds, fertiliser and Spartans applied has to be shown and in effect spread over the whole area.

So what cultivations and variable costs do you assign to year 2 of a legume fallow or nectar pollen? Did you assign a figure your valuations for topping set-aside or CS grass margins?