Many of the three-quarters of Scotland’s farmers who are still waiting to receive the first tranche of their support payments are now facing the additional burden and worry of a looming tax bill.
And yesterday those in the industry who are facing cash-flow problems were warned to take action before the 31 January tax payment deadline.
With recent adverse weather conditions, higher animal feed bills and fluctuating market prices adding to financial pressures, accounting firm Johnston Carmichael, which operates NFU Scotland’s Taxation Advice Helpline, reminded farmers that there were a number of options available to help cope in the short term.
Alex Docherty, a tax partner with the firm, said that farmers or their accountants should be looking at options to help reduce the immediate burden or, in certain cases, defer payment to a later time – but said they must act before the deadline.
“These include making use of HMRC’s ‘time to pay’ policy, which allows the taxpayer to clear any tax arrears in instalments,” she said.
“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.”
Docherty said if the profits had fallen significantly enough then the payments on account automatically calculated as coming due could be reduced to nil.
• As farmers continue to await their support payments, Bank of Scotland yesterday revealed that it had lent an extra £14 million in overdrafts to help tide farmers through the current “hungry gap” – with more requests coming in daily.
Lloyds Banking Group announced that an additional £500m fund would be made available for the industry across the UK when it became clear that delays looked likely. And an analysis carried out by Bank of Scotland showed that its farming customers received considerably less in basic payments to their bank accounts in December 2015 compared with the same period in 2014.
Sandy Hay, the bank’s head of agriculture for south and east Scotland, said: “Scottish farmers have had a tough year and a delay to their payments will have caused further worry. The fund has already helped to reassure many farmers and keep their business moving, whether they are looking to buy livestock, invest in crops or simply manage their cash flow.”