Arable farmers could ease their New Year cash flow this year after changes to support payments, says an accountant.
Under the old IACS regime, subsidy cash was taken into consideration when valuing autumn crops under a deemed cost basis for taxation purposes.
The deemed cost basis meant that some of the old arable payments were reflected in the stock valuation, which would generally appear higher than stock valuations prepared in the new single farm payment environment, said Carlton Collister of Grant Thornton.
But Mr Collister said the value of the new SFP would only be included in tax calculations when the 10-month occupation period required to claim it had ended.
“I have recently dealt with several arable farms with September 2005 year-ends where the SFP is not included.
We have, therefore, been able to reduce significantly the tax payable on 31 January.”
Farmers pay tax twice a year at the end of January and July, with the January amount being the balance of the previous year’s tax plus an estimate for the current year based on half the previous year’s tax.
But by using an SA303 form, Mr Collister said it was possible to inform the IR that profits for that period were likely to be lower and have the estimate for the current year tax reduced.
“In one case, payments on account, which would have been about 8000 had the 2005 result not been considered, have been reduced to nil.
“A repayment of tax has also been generated by claiming the loss expected in 2005/06 against income tax payable in 2004/05.
This is very welcome given that the receipt of subsidy payments has been delayed.”