Many farmers are anticipating reduced profits and even losses as their 2013 harvest results could be worse than last year's due to the poor germination of crops coupled with the appalling weather conditions of 2012.
The First Tier Tribunal looked at the case of a farmer and haulier, Mr Robins, who had made losses in his farming business that he wished to carry back to offset taxable profits in the previous year.
Robins had filed his 2011 tax return by 31 January 2012, but had not paid the tax liability arising on his 2011 profits by the same due date of 31 January 2012. His accountant had written a letter to HMRC expressing the view that there would be losses in the 2012 year that could be carried back to eliminate the 2011 tax liability – however, at the time of writing the letter, the loss was not quantifiable. Robins should therefore have paid his tax bill on 31 January and filed the appropriate loss claim as soon as his 2012 accounts had been prepared. Mr Robins had to pay a penalty for not paying his 2011 tax on time.
Catherine Desmond of the accountants Saffery Champness said, "It is important that where losses are incurred following a previously profitable year, accounts are prepared as soon as practically possible in order that a quantifiable loss carry back claim can be made to offset the earlier tax bill. Those who have an accounting year-end prior to 31 January may even be able to do this before the previous year’s tax becomes due.
"Even where accounts are not yet available, predicted losses of the current year can be a good reason for reducing the 31 January first payment on account for the current tax year, providing some assistance with cash flow."
