Avoid tax problems with good record keeping
Farmers and landowners are being urged to check that their financial records are up to date to avoid costly and lengthy investigations by the Inland Revenue.
“Tax planning is a lot to do with maximising the various reliefs that are available, and these are constantly changing, but equally it should be about minimising the risk of an investigation by HMRC. Attention to detail is very important, more so as the HMRC net widens,” said Saffery Champness senior tax manager Catherine Desmond.
“This is important because of the current climate of the Inland Revenue, which is paying particular attention to raking through people’s records. The government is very keen to ensure that nobody is avoiding tax, and we have seen an increase in the number of enquiries about records,” added Ms Desmond.
“With farming clients, it tends to be things like repairs that get looked at because people don’t always ask the contractors who are doing the work to provide them with detailed invoices. Make sure you have the right narrative on the invoice.”
Failure to keep up to date, thorough records could result in a lot of time and money spent dealing with the Inland Revenue’s enquiry and not having the correct evidence to present to HMRC, she said.
Other tax tips for farmers include:
- Staff entertainment and Christmas gifts – consider applying for a formal dispensation to reduce compliance costs and any tax burden on employees.
- Forward planning and financial forecasting must be done regularly and take into account recently announced restrictions to income tax reliefs.
- When purchasing machinery or plant equipment, ensure you plan carefully and purchase at the correct time to take advantage of the tenfold increase in Annual Investment Allowance to £250,000.
- If planning to release land for housing, renewables or any other commercial developments, plan ahead to mitigate capital gains tax.