Reaping The Rewards Of Attention To Tax Assets

Liam Clarke and Finbarr O'Connell explain how tax consequences need to be managed and cultivated in the right way.

In a recent agricultural administration appointment taken on by our London restructuring team, the need was highlighted for purchasers of businesses, and indeed insolvency practitioners selling those businesses, to consider all assets of a company, including the company's tax losses.

Sector overview

The agricultural sector, like many sectors of the UK economy, is struggling with the fact that the current economic forecasts are as bleak as this year's British summer weather forecasts. The recent media and political discussions relating to dairy farm production, and specifically milk prices, highlights the extreme pressures farmers and food processors are currently facing.

Despite the desire of the average UK consumer to support UK growers and producers, the marriage between the UK farmer and the national supermarket chains is a difficult one. The supermarkets' ability to control their own margins and supply chains does not fit well with the average farmer's increasing costs. Yes, the supermarket chains have recently increased farmers' dairy income, but some cynical observers have commented that this has more to do with ensuring the supermarkets' supply of milk by preventing the suppliers going out of business.

Sector expertise

Smith & Williamson's restructuring and recovery team has considerable experience of farming assignments. We have strong connections with farmer-controlled businesses (FCBs), landed estates and farmers, and have worked closely with food companies, including processors, manufacturers and retailers. These involvements have included giving strategic advice and assistance with regard to the acquisition and sale of agri-businesses. Our restructuring practitioners have undertaken a number of agri-business administrations and are familiar with the market-specific issues that an insolvency practitioner will often encounter in these types of assignments, in particular:

supermarket relationships farm business tenancies (FBTs) and how these might affect the holders of legal charges weather damage and insurance for it labour management, including migrant staffing issues. Within the Smith & Williamson group we also have individuals who are heavily involved in the agricultural sector. Steve Ellwood, head of our food and agriculture group, was formerly head of agriculture at HSBC Bank plc. Steve, who serves on the board...