Taxing problems persist for rural online returns

If the Scottish Government's farm support IT system wasn't enough to make Scotland's farmers rue the day that computers were invented then the UK government's plans to 'make tax digital' might just push them over the edge.
Rural areas are among the worst for digital connectivity. Picture: Ryan McVay/Getty ImagesRural areas are among the worst for digital connectivity. Picture: Ryan McVay/Getty Images
Rural areas are among the worst for digital connectivity. Picture: Ryan McVay/Getty Images

With only 12 months to go before the vast majority of farming businesses across the UK will have to file quarterly income tax returns on-line to HMRC, all four of the UK’s farming union’s yesterday termed the plans unsuitable and unworkable.

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The mandatory reporting of tax returns every three months will begin next April for farm businesses with turnover above the £85,000 VAT threshold – but the unions said that the scheme required access to a digital infrastructure which simply wasn’t available in many rural areas.

NFU Scotland vice-president Gary Mitchell said that farmers were most likely to amongst the 5 per cent of the population who lived in areas which were digitally disadvantaged.

And he continued: “The government proposes that making tax digital will bring business tax into the digital age – but for many of our members the digital age has yet to be delivered to them by the government.”

He also said that farming’s seasonality – with income and expenditure occurring in lumps in different seasons – meant the “averaging” effect of quarterly tax returns didn’t suit the industry and would provide little benefit to HMRC or farmers.

The complexity of modern farm businesses – with two-thirds running diversified enterprises which required different accounting and tax adjustments – and a possible requirement for separate income and expenditure reporting was, he claimed another compelling reason to postpone the move for farmers.

Jamie Younger, a partner with Saffery Champness, termed the move “a considerable challenge bringing most unwelcome additional red tape for business”.

He said that while smaller businesses with a turnover below the VAT threshold had gained more time to prepare, larger businesses needed to act now to be ready to supply quarterly updates by April 2018.

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“There is an urgent need for HMRC to deliver targeted support, guidance and online training soon. The system must also be secure and robust when it comes on stream in April 2018,” warned Younger.

• Responding to the recent broadside from NFU Scotland president Andrew McCornick over the continuing failings of the farm support IT system, rural economy secretary Fergus Ewing said he understood and was well aware of farmers’ frustrations.

Ewing confirmed that a further ten per cent of payments were now being made – with the payment of any balance to be “substantially completed” by the end of June 2017.