Making Tax Digital for Farmers
Posted On November 17, 2016 By mhauk
Major changes are being made to the way in which all taxpayers interact with HM Revenue and Customs (HMRC). The government is referring to these changes as “Making Tax Digital” and they are proposing a staged introduction to the new rules, starting for many in April 2018.
The proposals are wide-ranging, but one of the biggest changes planned is an electronic quarterly report to HMRC of income and expenditure. For many farmers, it is difficult to see what information HMRC will glean from this – tax will still be paid on the farm’s annual profit, but this is not usually determined until after the harvest is in, rendering the quarterly reports meaningless. Coupled with this, where farms are contracted, it may not always be feasible to obtain the necessary information required to submit the reports.
Software providers will play a big part in the changes. HMRC’s current proposals suggest that invoices must be electronically scanned into software, with this software automatically uploading summarised data (not the invoices themselves) to HMRC. Very few bespoke agricultural software packages are capable of submitting information directly to HMRC at present, and so it is vital that these software providers work with HMRC, farmers and their accountants to ensure the capabilities are there. Any farmers using manual cashbooks or spreadsheets are likely to have to upgrade to meet the requirements.
Broadband is still a major issue in many rural areas. Whilst HMRC have suggested an exemption for those with no internet or computer access, it is not yet known how far these exemptions will stretch.
We have replied to HMRC’s consultations on Making Tax Digital and we are expecting further announcements to be made over the coming months and we will keep you up to date.
If you have any queries or would like to discuss this in more detail, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Agriculture team.
This article originally appeared on the blog of our member firm, Larking Gowen.