Mr and Mrs Smith’s youngest daughter, Sarah, is looking to set up her own livery yard at the farm. Here are some tips on setting up this type of business.
Deciding what service to offer
Sarah will need to think about the sort of service she wants to provide, and whether it will be her main source of income, or if she just wants to make some money from renting out spare stables. If it’s the latter, then running a DIY yard may be the answer. In this case Sarah will be responsible for the maintenance of the place and won’t be expected to provide additional facilities. If she’s thinking about running a larger yard, then she’ll need to consider the facilities she’ll provide, and work out how many stables she needs to fill and at what price in order to make the business pay.
It makes sense to put a business plan together and to look closely at the costs involved in establishing the business. These will include providing suitable stabling, insurance (farm insurance covers only agricultural activities), security measures and daily running costs. Sarah may have to pay business rates, although small business relief may be available for new farm diversification businesses with a rateable value of £12,000 or lower for five years.
Sarah will need to apply to her local planning authority for change of use for the farm buildings she’ll be using for her business. If she decides to add facilities such as a training arena, she’ll need planning permission for any building or conversion work that’s required. She will also need to think about how she will dispose of waste; the average horse produces 7.5 tons of manure a year and there are regulations concerning its disposal.
Whilst public liability insurance is optional for some businesses, it’s compulsory for horse riding establishments. So if Sarah plans to do more than just offer livery, perhaps providing lessons, she will need to take out a suitable policy, and obtain a licence from her local authority under the Riding Establishments Act 1964.
As the business will be offering a paid service, Sarah will need to have a legal contract for use with her customers. This will need to cover what is and isn’t provided by the yard, the charges for services provided and the responsibilities each party has in relation to matters such as; vets bills, food and turn-out. In addition the contract should address commercial risks such as breach of contract, negligence and breach of statutory duty and apportion/limit legal liability for such risks accordingly.
Taking farm assets out of agricultural use means that they no longer qualify for agricultural property relief for Inheritance Tax purposes, although they may be eligible for business property relief, so the family needs to be aware of this.
Organisations such as the British Horse Society (BHS) provide a lot valuable information for start-up businesses in this field, including their BHS Approval scheme. Although there is a charge, being a member of the scheme would show that Sarah’s business meets the Society’s standards.
This article is taken from our Agriculture Newsletter (Spring/Summer 2018 Edition).