FARMERS should re-evaluate their businesses and put them in the strongest position ahead of Brexit and the 2020 CAP reform.

Old Mill, the farm accountants, said many dairy producers have re-assessed their businesses following the prolonged period of low milk prices. It has led to some positive changes and the company says all farm businesses should now do the same.

Dan Knight, director of rural services, said: "The past year has been extremely tough, particularly for farmers in the dairy sector, but I’ve been encouraged by how many families are using this time to take a hard look at their personal and business strategies."

Some have made new cost efficiencies, others have drawn up succession plans, while more have either committed to growth or refocused efforts on alternative enterprises.

But, Mr Knight said, as commodity prices improve, it was important not to allow inefficiencies to creep back in.

He said: "With CAP reform looming in 2020, as well as the uncertainty of Brexit, we don’t know what lies ahead. Right now, the weak Pound means British agriculture could enjoy a buoyant couple of years, so it’s important to make and keep as much money as possible, in case another downturn – or loss of government support – sits on the horizon."

In the short-term, he said farmers should consider how to reduce their tax liabilities ahead of the 2017 tax year-end. They should then sit down and examine their longer-term strategy, to ensure the business is in the strongest position going forward.

He said: "To begin with it’s essential to have a frank conversation with everyone who has an interest in the business. Involve future generations and ensure every party is clear about their personal and business objectives; that may not be to maximise turnover, but to earn enough to have the lifestyle of choice."

It was also important to consider retirement provision when the older generation steps back. "They will want to be financially independent, so look at what other income they do – or potentially could – have," said Mr Knight.

When it comes to succession planning, he said families often fail to recognise the distinction between being equal and fair. "Trying to split assets equally between siblings may not be fair or good for the business. If one child gets a house and an income stream, while another gets the farm, that may be a fair outcome which enables the business to continue."

Tax planning was always critical when re-evaluating business strategy and inheritance, particularly where diversification is involved. "But it should not be the driving factor: Make the tax fit the objectives, not the other way around."