Partnership agreements are, without doubt, the most common business structure for farms in the UK.  Partnerships are often undocumented and a bit of mystery, used by families solely to divide farm profits.  Anyone farming in a partnership should fully understand the limitations and benefits of such arrangements and insist on clear written documents to capture key terms. 

Here are some points to consider when you are reviewing or looking to formalise a new trading farm partnership:  

• A farm partnership is not a separate legal entity, so cannot own assets or liabilities itself, these are owned by the partners. If you are looking for a business which can hold it’s own assets or liabilities, a Limited Company or a Limited Liability Partnership might be a better option.   

• Always have a written partnership agreement – it doesn’t matter if the business has been trading for some time. Template agreements can be provided by solicitors and can be put in place even if you have been trading for some years already. It is always a good idea to consult the partnership’s accountants to ensure the partnership agreement effectively reflects the business’ trading.  

• What should you should include in the partnership document: