finance Trim the Fat with Accounts Solutions that Make Sense With economic outlooks for 2022 predicting increasingly inflated input costs, analysing your business incomings and outgoings (and ensuring the balance stays as healthy as possible) becomes even more critical. Fortunately, with the right tools, a wealth of data can be generated from just ‘doing the books’ (entering invoice and payment details), giving you a detailed picture of what works for your farm… and what doesn’t. This includes which customers and suppliers produce the best margins for you, what areas of your business perform the best and why, highlighting any excess slack to trim and
maintaining control over your debtors. Investing in economically sensible tools such as SUMIT’s agri-specific Total Accounts software can provide high returns on investment by helping you track this painlessly. Additionally, you can be confident that providers from within the industry really understand the ins and outs of your business, potentially more so than large-scale generic programs. With the extension of HMRC’s Making Tax Digital scheme to all VAT registered businesses (previously only those with annual turnover greater than £85k) from April 2022, software
is now a necessity if you are to remain legislatively compliant. Choosing a product that specifically suits your business can be daunting, especially when there are a number to choose from, but focussing on agrispecific packages, such as SUM-
IT’s, will help to narrow your search and make sure you’re dealing with software houses that really understand your needs. Explore options that make good financial and business sense to minimise risk for you over the coming years.
Lump sum exit payments need careful consideration, says Carter Jonas Tenant farmers need to fully understand the details and tax implications of the Government’s lump sum exit payment scheme before making any decisions about their retirement, says Carter Jonas. Details published this week should be welcomed but may not go far enough, according to James Bradley, a Partner at the firm. Mr Bradley said many farmers have been waiting to see the details of the scheme, so the development should be viewed as “a positive and helpful step”. He said: “The issues that businesses face with succession planning and/or retirement, coupled with barriers to entry experienced by younger farmers, are well known, so it’s worth looking at any initiative that can smooth a path out of, or in to, the industry. “Careful consideration should be given to the offer being made by Government and how this might benefit an 132
individual retiree’s plans. For example, full residential value is rarely reflected in the rent paid for Agricultural Holdings Act tenancies, and the outgoing farmer will find residential rents to be both higher and reviewed more often. “Operation of farm businesses can also offer other allowances and benefits that should not be forgotten when making an evaluation. A lack of retirement provision and availability of housing is a major problem for many tenant farmers. “The lump sum exit scheme is not a grant and will therefore be subject to Capital Gains Tax. With no base cost of entitlements the whole amount will be subject to tax. Individuals should consult with their financial adviser and check personal allowances that may be used to offset gains. “The principle behind the scheme should be supported, and for those who are already
planning or considering retirement, the offer from the Government could be an added incentive to act. However, it would seem unlikely that the
details we have seen this week will be the catalyst for a large number of retirements, which is the significant shift that Ministers are hoping to create.”
Make sure your business is ready for mtd by 1st April
From 1st April 2022, the Making Tax Digital (MTD) initiative will be extended by HMRC to include VAT-registered businesses below the current £85,000 turnover threshold who were previously exempt from this scheme. Farmplan, the UK’s leading agricultural software specialists, is encouraging all farms to check that they have MTD compatible systems in place to ensure that they are adhering to these rules.
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The MTD regulations require businesses to keep digital records of all transactions that make up the figures reported in their VAT return. If more than one system is used, these need to be linked digitally and kept using an approved computerised method. The regulations will apply to all businesses that conduct VAT submissions, whatever their turnover – those that do not comply will be at risk of facing penalties.
