Farm Business Records - The Life Of The Business
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tax cases combined with HMRC guidance on
business records have highlighted that there is a greater need for farm
businesses to aim towards improved records and to try and keep records
21 February 2011 HMRC introduced four new products
to help Small and Medium Enterprises (SMEs) raise their business
records to a
higher standard. This
Consultation Document in December 2010, suggesting that poor record
leading to a loss of tax in 2 million SMEs and proposed to launch a
compliance checks on SME records.
four new products are suitable for the
self-employed, sole traders and small businesses.
They have been produced in advance of the
launch of HMRC’s new Business Record Checks programme later in 2011,
impose penalties for significant record-keeping failures.
Redford, HMRC’s Acting Director, Business
Customer Unit, said:
this year, HMRC will start a programme of Business Record Checks
that will look at the adequacy and accuracy of business records in SMEs
bring about a major improvement in the standard of record-keeping. Now
time to invest a bit of effort to make sure your business records are
is something for all farm businesses – from
basic factsheets to online tools:
records for a business – what you need to
know: a basic guide with a helpful list of where to get more
general guide to keeping records for a tax return:
detailed guidance on record-keeping covering what type of records you
to keep, common problems and examples for different types of
up a basic record-keeping system: with examples of
spreadsheets and information about setting up a record-keeping system. www.businesslink.gov.uk/recordkeeping
out what records the business should be keeping:
look at the records the business needs to keep and assess how well they
being kept. If a
farmer is thinking of
starting a business the tool provides a checklist.
If the business is established it will give
feedback and advice on improvements you may need to make. www.businesslink.gov.uk/recordkeepingcheck
recent case of Golding
(Golding v HMRC  UK FTT 351) has
raised very interesting tax planning points but one key point arising
perhaps the need to keep records for longer than the statutory time,
would seem from the start of trading.
When looking at the business matrix and the general
position on Golding it wasn’t just
a question of
looking at what happened in the last two years - the history was a key
and how can the history of the farm business be argued to help the
the accounts and the accounting records and other information is
present that history? A
large number of
decades were actually considered and therefore there must be the
this time, ideally from the start of the business – in the case of Golding
his father transferred ownership
other inheritance tax (IHT) cases did not actually
just look at the two year rule for Business Property Relief (BPR) or
years for Agricultural Property Relief (APR). These
cases look back over a longer period to
establish the business matrix, a business model or to provide replies
and, if necessary, the First Tier Tribunal (FTT).
The cases of Balfour (Brander
(Representative of Fourth Earl of Balfour) v HMRC Commissioners 2009 UK
and Farmer (Farmer
v IRC 1999 STC (SCD) 321) both looked at eight years
records to establish the eligibility of the claim for BPR so that HMRC
review the questions of capital, profitability, turnover and number of
and the split of all these items between the investment side of the
and the trading side of the business.
message of these Tribunal cases does seem to be to
stop the “shredder” when it comes to farms, estates and potential IHT
With regard to any
business where BPR is
going to be claimed and there is a possible worry over questioning s
1984 or establishment of a business, records could be needed.
the possibility to keep the records in electronic
format, this could be the way forward for IHT protection – records
commencement of trading. IHTM
states that with regard to studs and APR “an essential requirement is
element of horse breeding carried on in a systematic manner with proper
keeping.” HMRC will
therefore want to
test these “proper” records where a claim for APR is made.
is no escaping the fact that to support
arguments that have been presented in recent Tribunals to protect the
records to provide evidence have to be kept for a long period of time -
complete protection since the start of the business.
In the case of a farm and stud this will
include livestock records etc that tie in to the traditional records.
the ability to keep records electronically the
approach to the keeping of the key documents will have to be considered
for the life and the history of the business – back to 1965?
The strategy for the
record and document recording
will have to be reconsidered in order to protect future claims for APR
and generally to keep HMRC happy with regard to any possible business
About the Author
Supplied by Julie
Butler F.C.A. Butler
& Co, Bennett House,
The Dean, Alresford, Hampshire, SO24 9BH.
Tel: 01962 735544. Email; email@example.com,
the author of Tax Planning for Farm and Land Diversification (Bloomsbury Professional), Equine
ISBN: 0406966540, and the forthcoming Stanley:
Taxation of Farmers and Landowners (LexisNexis)
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Article Published/Sorted/Amended on Scopulus 2012-04-20 14:22:29 in Tax Articles