Taxman to benefit from virus victims


18 July 2001



Taxman to benefit from virus victims

By Tom Allen-Stevens

FARMERS who have lost their livestock during the foot-and-mouth crisis could be hit by an extra tax burden on the compensation payment.

If stock is classed on a herd basis, compensation for slaughtered animals is tax-free until the herd is replaced.

And replacements would be an allowable deduction, cancelling the tax liability.

But this does not apply to about 20% of stock affected by the crisis which are classed as immature, and compensation for which is immediately taxable.

The Institute of Chartered Accountants of Scotland, which has highlighted the problem, has written to the Inland Revenue recommending a new extra statutory concession.

“The foot-and-mouth epidemic has proved a tragedy to many farmers,” said James Robertson, convenor of the institutes taxation practices.

“Unfortunately, the strict law does not cater for what is a natural and unexpected tragedy.

“Paying additional tax at such a tragic time would not be in the interests of the industry or the future survival of the farming activity,” said Mr Robertson.

The call for a new concession follows that made in May for farmers whose animals are treated as trading stock.

Those animals valued individually, rather than on the herd basis, can now spread profits on the compensation over the next three years.

Mature animals slaughtered during the foot-and-mouth crisis qualify for herd-basis treatment.

This eases the immediate tax burden on farmers and preserves much-needed cashflow.

Female animals are regarded as becoming mature and qualifying for herd basis when they have produced their first young.

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