Farmers who are still waiting to receive their full Basic Payment should consider asking for their January tax bill to be deferred, according to accountants Old Mill.
Pointing out that thousands of farmers are still waiting for their money to arrive, Old Mill’s director of rural services, Mike Butler, advised farmers to talk to the HM Revenue & Customs as soon as possible.
“There is no question that this is putting tremendous pressure on farm cash flows,” he said, adding that, on the whole, trading results were reasonably firm in 2014/15, so many farmers will have tax to pay despite the current downturn in revenues.
To minimise the tax due, farmers should revisit their self-assessment returns and reduce payments on account for 2015/16 to reflect the lower commodity prices.
“There may also be the potential to recover any tax due for the previous year, whether through farmer’s averaging or other means, so it’s vital to act now to get plans in place before the March 31 or April 5 year-end,” said Mr Butler (pictured above).
“There is no automatic right to set off, but there is certainly scope to contact HMRC to explain the situation and come to an agreement regarding tax payment terms. Seeking this kind of clarity in advance should help avoid potential late-payment penalties.
“Although paying interest may seem regrettable, HMRC’s rates are not materially dissimilar to bank lending rates, so many businesses may look to take advantage of any such opportunities now.”