By Andrew Shirley

DESPITE the Inland Revenues recent ruling over the treatment of sugar beet contract sales, uncertainties still remain, according to accountancy firm Deloitte & Touche.

“On the face of it, the IR is proposing sale proceeds are treated as income, but there still seems to be the possibility of treating proceeds as capital in certain instances,” says tax expert Caroline Marshall.

“This could happen when the disposal is part of a significant reduction in business activity or when the owner is retiring,” she explains.

Treatment of purchases is also vague, but the overriding view is that the cost will be allowed over the period for which the contract is perceived to have value to the business.

However, the IR also infers that a purchase may be fully deductible in the year of acquisition, notes Mrs Marshall.

“For buyers, relief over five years would range from 1.20-2.40/t, according to the rate of tax paid. But relief in the year of payment could be argued.

For sellers, it looks like a sale at 30/t may give rise to a tax liability of 6-12/t for those paying 20% or 40% tax respectively.”

Brokers report trade is fairly settled at around this price, and Duncan Clark of DCFM reckons this is unlikely to change.

“Since the scheme started we have never been so short of available contract. At 30/t supply is starting to dry up.”

He says the only exception is the York factory area where values are up to 5/t less.

“British Sugar wants more beet in York so wont sanction any transfers out of the area. This is holding back the price.”

Mr Clark has traded 177,000t of conditional contract so far, while BS says around 500 transfer applications have been received, totalling 200,000t of beet.