Time for second tax payments
Time for second tax payments
SECOND interim payments for the 1998/99 tax year will soon be due.
Many farmers may be able to reduce this liability if they made a loss or low profits in that year, but they need to act quickly as the July 31 deadline is looming, says Val Wallbank, senior tax manager at Grant Thorntons Bedford office.
"Care needs to be taken to ensure the payments on account are not reduced below the actual liability for the year, or interest will be charged at 7.5%. Where averaging is being considered, this can become particularly complex, as averaging has to be taken into account when calculating the 1998/99 liability."
Those seeking to aid cash flow by reducing July interim payments or claiming repayments as a result of averaging or loss relief claims should get the information to their advisers as soon as possible, says Mrs Wallbank.
"Averaging claims can only be made in the tax return relating to the second year of averaging. The liability for the first year remains unchanged and any adjustment is made in the computation for the second year.
"Thus a farmer can reduce his interims based on 1998/99 profits, but cannot make a claim for averaging until the year 1998/99 tax return is completed.
"If we havent got the information, we have got problems. To make the claim to reduce the interim payment, we need to have all the information for the tax return including any other income which the farmer might have, as well as his farm accounts for the year."
But if a farmer has losses, then the claim can be made as soon as the existence of the loss is established. *