Farmers Weekly’s Business expert Mike Butler gives advice on tax liability.
Q I have to pay my tax for the 2013/14 tax year by 321 January, is there anything I can do to reduce the bill or is it too late to take any mitigating actions?
A With the volatility of farming returns, most notably the price drops across almost all farming enterprises, it is a good time to look at whether these most recent reductions in returns might have as big an effect on your tax liability as you expect.
See also: Tax efficient farm repairs
The main problem is that your potential reduction in tax liability for the current year might not become relevant until this time next year. Depending on your year end, you may be able to get your accounts prepared and carry back a loss generated in the 2014-15 reporting period to the 2013-14 tax return.
Mike Butler, partner, Old Mill
This will apply to businesses with post-5 April 2014 year ends, and year ends not beyond 30 January 2015. Practically speaking, it is more likely to be year ends to 31 December 2014, as there is unlikely to be sufficient time to complete the business records in time for year ends beyond that date.
This sort of adjustment provides an immediate cashflow saving. Being aware of your year-to-date trading performance will also give a good insight as to whether any payments on account towards next year’s tax liability could be reduced.
However, reductions that turn out to have been incorrect could mean interest and penalties are charged. Conversations with your accountant will provide a greater insight as to whether this is the right option to take.
The information provided in these articles does not constitute definitive professional advice and is provided for general information purposes only.
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