It has been an interesting 12 months on the tax front as HMRC continues to clamp down on tax avoidance albeit at the affluent end of the scale. Being ready confidently to face a tax inspection with all records in order, or not to trigger one, comes top of the list of five tax tips from Saffery Champness for rural businesses to put their tax affairs in order for 2016.
David Chismon, Director at Saffery Champness and a member of the firm’s Landed Estates and Rural Business Group says:
Tax planning has a lot to do with maximising the various reliefs that are available, and these are constantly changing – but equally it should be about minimising the risk of an investigation by HMRC as a result of either a mistake or an oversight. As ever, attention to detail is very important; more so as the HMRC net widens.
1. Tidy up loose ends. Record keeping should be a priority, and all records in relation to tax should be up to date and thorough right through the year. This will save a lot of time and effort should HMRC decide that your affairs merit an investigation, and will also make it much less onerous to compile your annual tax return when the time comes.
2. Rural businesses that are spending on entertainment for their employees or that are giving gifts in the run-up to Christmas may like to consider reducing compliance costs and any tax burden on employees by applying for a formal dispensation. Dispensations can also be useful for unusual items of employee expenditure including allowances for subsistence whilst working long hours away from their usual location.
3. Planning ahead and financial forecasting are essential to get the most effective use of the tax reliefs that remain available.
4. The Annual Investment Allowance decrease to £200,000 at 31 December 2015 means that plans for major investment in plant or machinery qualifying for AIA should be carefully considered. This is especially true for businesses who do not have a 31 December accounting year end because expenditure incurred between 1 January 2016 and the accounting year end following may not be the full £200,000.
5. Finally, landowners and farmers planning the future release of land whether for housing, renewables or other commercial development, need to plan well ahead in order to mitigate against Capital Gains Tax payable on a sale as a lower rate may not be available in all circumstances.
