The farming industry is experiencing many highs and lows. Despite this, we are always impressed by the resilience of the sector and we are working with many of our clients to explore new opportunities arising.  Our advice is give yourself the best possible chance to successfully navigate what lies ahead. You must fully understand your business and the significance of the business decisions you make now.

Please take time to read this update and if you have any queries or would like further clarification on any of the topics mentioned, please do contact your Old Mill adviser.

Other websites of interest we would recommend:

www.businesssupport.gov.uk/coronavirus-business-support/

www.gov.uk/business-and-industry

Some of our clients are questioning whether taking on additional borrowing is the right thing for their business. Our usual advice to borrowers still applies; you need to ask yourself whether or not it’s a good idea to borrow. You can find out more on our Insight article here.

A proportion of our clients are at their financial year-end and face the prospect of future losses within their business. Ordinarily, if these losses occur after the financial year-end, then you’ll have to pay tax on the profits already accrued, with the losses accumulating in the following year. If this then results in a loss the next year, these losses can be carried back, but a Limited company with a 31 March 2020 year-end, paying tax on 31 December 2020, will have to wait well into 2021 before they can consider any potential refunds.

A way around this is to consider extending your financial year-end into the loss-making period up to a maximum of 18 months. Businesses can then average its profits over an 18-month period capturing the losses now and not having to wait more than 12 months.

Whilst rules apply on how often you can extend your financial year-end, all businesses should consider the appropriateness of this planning.

Please speak to your adviser to find out more.

One way to bolster your earning potential is to explore whether you can take advantage of Research and Development (R&D) tax credits. Many farmers and those working in the wider agricultural industry don’t believe they can benefit from R&D tax relief because ‘there can’t be much R&D happening in the rural sector’. But this simply isn’t true. R&D tax relief applies to many sectors, and the agricultural sector is certainly one of them. Read our Insight article to see if you can take advantage of R&D.

Amidst the many changes that HMRC have announced in recent weeks, on Thursday 26 March they introduced temporary changes to pension processes. The changes come in response to an increasing number of queries regarding SSASs that own commercial property that is ‘let to’ the sponsoring employer asking about rent holidays, reducing rent and payment deferrals. This also includes deferment of loan repayments and loan repayment holidays on employer loan repayments, with many businesses looking to reduce their outgoings due to the current COVID-19 situation. Read our Insight article to find out more.

New regulations regarding overdraft costs take effect from Monday 6 April, putting onus on the banks to ensure that customers are borrowing within their means. Our Insight article has further information on this.

During this period of instability, we are finding that our clients who have migrated to cloud accounting software are in the best position to manage their business.  Doing your accounts online gives you (and us) access to your business’ live data and reports which significantly helps with management decisions, cash flow and loan requests. For more information on utilising Xero software please contact your adviser or read our Insight article to learn more.