HMRC change the rules .

[Oscar]

Ju
st back from accountant for end of year chat and preparing for tax return. Had a bit of a shock as my accountants say HMRC have changed the rules which has had a bad effect on my tax position.
Basically I have a arable and grass farm and a contract spraying round which all goes through my farm a/c and vat. Upto this year, all the income and costs have been done as " one " business so at the end any losses from one can be offset against profit from the others. However this year,although it's still the same from my end, my accountant has had to split contract income,farm income and rent income as three separate mini businesses and what has happened is my contracting has made a healthy profit, grass and shed rent has made a good profit but the farm has lost money. Due to new rules, the losses from the farm can t be used to offset the profit from the other two and so I will have a bigger tax bill to pay while the losses can be carried forward to next year only but as it's likely the farm will loose money again next year, they are not really any help!
It does not seem very fair. If I had a completely different business, ie a building firm, then yes I can see you can t use the offset but as its three farm related income streams, does not seem right.
Just a heads up for you all!
Ps, in process of loading contracting side with more costs away from farm to try and reduce profit. Will see how far I can go and what accountant will allow !!

 

[spin cycle]

sounds like bull poo to me

 

[onesiedale]

Think it's worth speaking to another accountant

 

[Phil P]

Ju
st back from accountant for end of year chat and preparing for tax return. Had a bit of a shock as my accountants say HMRC have changed the rules which has had a bad effect on my tax position.
Basically I have a arable and grass farm and a contract spraying round which all goes through my farm a/c and vat. Upto this year, all the income and costs have been done as " one " business so at the end any losses from one can be offset against profit from the others. However this year,although it's still the same from my end, my accountant has had to split contract income,farm income and rent income as three separate mini businesses and what has happened is my contracting has made a healthy profit, grass and shed rent has made a good profit but the farm has lost money. Due to new rules, the losses from the farm can t be used to offset the profit from the other two and so I will have a bigger tax bill to pay while the losses can be carried forward to next year only but as it's likely the farm will loose money again next year, they are not really any help!
It does not seem very fair. If I had a completely different business, ie a building firm, then yes I can see you can t use the offset but as its three farm related income streams, does not seem right.
Just a heads up for you all!
Ps, in process of loading contracting side with more costs away from farm to try and reduce profit. Will see how far I can go and what accountant will allow !!

Recently been to see our accountant and they never mentioned anything about this, we have multiple income streams to our business.

 

[teslacoils]

Sounds like new accountant time.

 

[Jerry]

So he is now doing three separate returns?

Is the business run under one VAT number?

Is it run as one business through the bank account?

I would have a stern word with him and find a new accountant!

What he is proposing would have a material impact on any diversified business, not just farming, and it would be all over the media!

 

[Little squeak]

sounds like he is tryng to justify 3 bills for the same work

 

[Still Farming]

HMRC keen on how losses are treated not often how losses made.
Your Accountant will love the 3 split account also as 3 lots of tax returns so 3 invoices for that plus 3 lots of accounts to do so 3 bills for them.
If your accountant does your vat also you guessed it 3 more bills?
Happy Christmas.

 

[Will Blackburn]

If that is how it has to be, then the contracting business needs to receive a rather large bill from the farming business for premises etc, that's how multinationals (Amazon, Starbucks) legitimately offshore tax liabilities.

 

[jimred]

Ju
st back from accountant for end of year chat and preparing for tax return. Had a bit of a shock as my accountants say HMRC have changed the rules which has had a bad effect on my tax position.
Basically I have a arable and grass farm and a contract spraying round which all goes through my farm a/c and vat. Upto this year, all the income and costs have been done as " one " business so at the end any losses from one can be offset against profit from the others. However this year,although it's still the same from my end, my accountant has had to split contract income,farm income and rent income as three separate mini businesses and what has happened is my contracting has made a healthy profit, grass and shed rent has made a good profit but the farm has lost money. Due to new rules, the losses from the farm can t be used to offset the profit from the other two and so I will have a bigger tax bill to pay while the losses can be carried forward to next year only but as it's likely the farm will loose money again next year, they are not really any help!
It does not seem very fair. If I had a completely different business, ie a building firm, then yes I can see you can t use the offset but as its three farm related income streams, does not seem right.
Just a heads up for you all!
Ps, in process of loading contracting side with more costs away from farm to try and reduce profit. Will see how far I can go and what accountant will allow !!

Bet the accountants bill has gone up too to cover all the time he's been fiddling about but he'd be holding his breath a long time before he got a penny out of me.

 

[Still Farming]

Farms are more and more diverse these days so Accountants and HMRC should weigh up as a whole but they don't as their "splitting the atom" ,and after their "cut" for your entrepreneurial advancements.

 

[Princess Pooper]

Ju
st back from accountant for end of year chat and preparing for tax return. Had a bit of a shock as my accountants say HMRC have changed the rules which has had a bad effect on my tax position.
Basically I have a arable and grass farm and a contract spraying round which all goes through my farm a/c and vat. Upto this year, all the income and costs have been done as " one " business so at the end any losses from one can be offset against profit from the others. However this year,although it's still the same from my end, my accountant has had to split contract income,farm income and rent income as three separate mini businesses and what has happened is my contracting has made a healthy profit, grass and shed rent has made a good profit but the farm has lost money. Due to new rules, the losses from the farm can t be used to offset the profit from the other two and so I will have a bigger tax bill to pay while the losses can be carried forward to next year only but as it's likely the farm will loose money again next year, they are not really any help!
It does not seem very fair. If I had a completely different business, ie a building firm, then yes I can see you can t use the offset but as its three farm related income streams, does not seem right.
Just a heads up for you all!
Ps, in process of loading contracting side with more costs away from farm to try and reduce profit. Will see how far I can go and what accountant will allow !!

Rental income is usually taxed separately and there is nothing new in that, it is still on the farm accounts but treated differently on the tax return. Regarding the contracting and farming activity, even if for some reason they have split them, - and if the contracting income had grown and the farm income is small then this might be justifiable, then farming losses can be offset against other income in the same year - remember the 'hobby farming' rules? After 6 years this may not be allowed, but as long as the farm makes a profit every one year in 6 then all is hunky dory. Even if it doesn't, and let's admit it, a lot of farms do make a taxable loss 6 years on the trot, especially beef/sheep farms, then as long as you are farming with a view to profit and it's not an obvious tax dodge then it should still be allowed. Perhaps your business has always had the enterprises accounted for separately but you've just come up against the trigger for the hobby farming years? Although this gets techinical, it does explain it. https://www.taxadvisermagazine.com/article/down-farm-0

When I worked in practice there were a few businesses where they had a small farm and a large diversified enterprise, all trading under the same title and same VAT number. Only a single set of accounts was prepared and only one tax return, but the 'profit' from the farming and the diversified enterprise had to be calculated separately for tax purposes.. (This also affects farmer's averaging). This is one reason why anyone diversifying should ensure they are aware of the tax implications!

 

[Will Blackburn]

Isn't the 6 years for a start up?

 

[onesiedale]

Ps, in process of loading contracting side with more costs away from farm to try and reduce profit. Will see how far I can go and what accountant will allow !!

It would worry me more moving the costs about as you suggest here. This just seems like an exercise to satisfy your accountant, and is only adding accountancy costs and 'risk' to your business as you are deliberately swaying the figures.

Best policy is honesty. The business is one, it is yours, it has 3 legitimate areas all related to the farm. Get your accountant to return it as one business or seriously look for someone else to do your HMRC returns as it's you and your business that is being disadvantaged.

Our business has 2 'enterprises' with 2 bank accounts but return vat and HMRC affairs as 1

 

[Still Farming]

Rental income is usually taxed separately and there is nothing new in that, it is still on the farm accounts but treated differently on the tax return. Regarding the contracting and farming activity, even if for some reason they have split them, - and if the contracting income had grown and the farm income is small then this might be justifiable, then farming losses can be offset against other income in the same year - remember the 'hobby farming' rules? After 6 years this may not be allowed, but as long as the farm makes a profit every one year in 6 then all is hunky dory. Even if it doesn't, and let's admit it, a lot of farms do make a taxable loss 6 years on the trot, especially beef/sheep farms, then as long as you are farming with a view to profit and it's not an obvious tax dodge then it should still be allowed. Perhaps your businesses have always been accounted for separately but you've just come up against the trigger for the hobby farming years?

But if you do sustain losses over their relavant time periods your knackered no fault to yourself if losses are losses?
If you are stuck in a spiral.
We all love to make profits but if you can not, you can not?

 

[Still Farming]

Isn't the 6 years for a start up?

No everyone

 

[Still Farming]

Nice bed time reading on simular:-

https://www.google.com/url?sa=t&source=web&rct=j&url=http://taxandchancery_ut.decisions.tribunals.gov.uk/Documents/decisions/Scambler%2520v%2520HMRC%2520decision%2520for%2520website.pdf&ved=2ahUKEwjizMOriIvmAhWGQkEAHXP2BR0QFjARegQIChAB&usg=AOvVaw17PEoTv-jlBN-C2t8Ck_t5

 

[michael N123]

Instead of sending out bills for contracting should you not send them out for selling straw

 

[Renaultman]

Think it's worth speaking to another accountant

This!

 

[Oscar]

Woah... Don t blame the messenger !!!
First off, this is one of the biggest accountants in south west with a big farm presence and I know and am sure that they are not lying. The assistant quoted some regulation number which this comes under but I did not write it down.
I was told this was a new rule, I don t like it and you don t like it but that does not mean it has not come in !
No, all three go through one bank a/c and vat return.
On my tax return, they have added extra self employment pages to split farm and contracting. Rent from sheds has gone onto my property tax forms which I already had as I rent out houses (outside of farm buisness). So no extra tax returns etc as others thought but yes a bit more time maybe. However, as I m on quickbooks and everything is allocated and split by me through the year with codes, it's not really hard. My accountants bill is the same as last years so no they are not doing this for their sake.
The only thing a bit different this year for me is that I had no losses from previous years to carry into this tax year and no written down allowances either so maybe because of that I have entered into a new position which is unusual for me ?