Guidance issued ahead of 31 January deadline
With the 31 January tax payment deadline fast approaching, Johnston Carmichael – who operate NFU Scotland’s Taxation Advice Helpline – has reminded farmers of some options available to them.
The guidance recognises that many farmers may be experiencing cash flow pressures given recent adverse weather conditions, fluctuating market prices and the delay in Scottish Government distributing support payments under the new Basic Payment Scheme (BPS).
Although Cabinet Secretary Richard Lochhead has stated that the majority of farmers and crofters will receive their 70 percent part payment for BPS by the end of this month, with tax payments due by 31 January, this could still be cutting it fine for farmers to get their tax payments in on time.
Tax Partner at Johnston Carmichael, Alex Docherty said: “For farmers experiencing cash flow issues, there are a number of options available to them to help reduce the tax burden or, in certain cases, defer payment to a later time.
“These include making use of HMRC’s ‘time to pay’ policy, which allows the taxpayer to clear any tax arrears in instalments. If that is an option then farmers, or their advisor, must get in touch with HMRC ahead of the 31 January deadline and put a payment plan in place.
“Where appropriate farmers can also look to reduce payments on account towards the next year’s tax where profits are now likely to be substantially reduced. Each payment on account for a tax year is normally equal to half of the net income tax liability of the previous tax year.
“Indeed, if the profits have fallen significantly enough then the payments on account automatically calculated as coming due can be reduced to nil.
“Thirdly, averaging enables farmers to lessen the effect of high tax rates in a successful year when preceded or followed by a more difficult trading year. If profits in the current or preceding accounting period are at least 25% down, then some form of averaging over the two years should be available.”

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