5 April 2002

Quota concession

DAIRY farmers who trade as limited companies can offset the cost of buying milk quota against profits after an announcement by chancellor, Gordon Brown, last week.

The change could improve margins by several thousand £s. Previously, such transactions were treated as a capital gain, says Mike Butler, a director of Tenon Rural Group based in Shepton Mallet, Somerset.

"These new rules are not available to partnerships and sole traders," says Mr Butler. "This seems somewhat unfair, but the scope of any new tax rules could be extended to cover these businesses."

Existing quotas will be treated under the old rule but this may not necessarily cause a problem, he adds. "It is perfectly possible for companies to sell and then reacquire quota holdings to take advantage of any new rules."

The rule change results from proposals on so-called intangible assets announced last November by Mr Brown. &#42