IR tax burden plea
IR tax burden plea
FARM accountants are putting pressure on the Inland Revenue to ease the tax burden on clients who have lost stock to foot-and-mouth.
The Institute of Chartered Accountants in Scotland has written to the Revenue asking it to change a rule that prevents compensation for immature animals from qualifying for herd basis tax relief.
Compensation for mature animals is tax-free until the herd is replaced, preserving cash flow. Replacements are allowable deductions, so, provided replacement costs equal or exceed the compensation, no tax is payable after restocking either.
But about 20% of stock affected by the crisis is classed as immature and does not benefit from this relief. Female animals are only regarded as becoming mature when they have produced their first young. Until that happens, compensation is subject to tax as soon as the farmer receives it.
"The timing could not have been worse, as, even within a few weeks, many immature animals would have qualified for herd basis," said James Robertson, convenor of the institutes taxation practices.
"Unfortunately, the strict law does not cater for what is a natural and unexpected tragedy." *