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We act for a number of farmers who received compensation in 2001-02 for non-herd animals slaughtered in the foot and mouth epidemic and who used the Extra-statutory Concession B11, thus excluding the profits from the compensation in the tax year when the slaughter took place. One-third of these profits is then assessable for each tax year following the year of slaughter.
We act for a number of farmers who received compensation in 2001-02 for non-herd animals slaughtered in the foot and mouth epidemic and who used the Extra-statutory Concession B11, thus excluding the profits from the compensation in the tax year when the slaughter took place. One-third of these profits is then assessable for each tax year following the year of slaughter.
Many of our farmers are claiming tax credits and one has had a compliance investigation where the Revenue is insisting that the one-third profit from 2001-02, now brought back into tax, should be included as part of the taxable profit in the 2003-04 year for tax credit purposes.
The tax credit system commenced on 6 April 2003 and although the 2001-02 year formed the basis of the first year's claim, the actual profit for 2001-02 falls out of the eventual calculation for tax credit benefit.
It now appears unfair that income from 2001-02 should be brought into account in the 2003-04 year and it seems that our clients are being penalised by having opted for the concession.
Farmers' averaging is not allowed in tax credit claims, however the Inland Revenue advises that the foot and mouth compensation spreading should be treated in a different manner. Is the Revenue correct?
Readers comments are welcomed.
(Query T16,593)
