The UK’s four farming unions are calling on Government to delay the new Making Tax Digital scheme for farm businesses, many of whom will find it almost impossible to access.
Following a joint consultation response on the Making Tax Digital draft legislation, the NFU, NFU Cymru, NFU Scotland and Ulster Farmers’ Union fear that the scheduled implementation will be inaccessible for many farm businesses and difficult to implement properly.
In what has been described as a 'complex' scheme, the union say it requires access to digital infrastructure that is not available in many rural areas, as 5% of the population does not have adequate access to broadband – many of those people are farmers.
Plans to digitise all tax-related accounting is due to be phased in from 2018 onwards, but rural businesses and farmers have criticised the plans.
'Serious concerns'
National Farmers' Union (NFU) President Meurig Raymond said that all four farming unions are together calling for the Government to delay the implementation of Making Tax Digital for farmers and aligning the introduction with larger partnerships and limited companies.
He said: “The Government proposes that Making Tax Digital will bring business tax into the digital age but for many of our members the digital age has yet to be delivered to them by the Government.
“This fact, combined with overwhelming complexity, is why action is necessary. We have serious concerns for those farm businesses that will be among the first forced to comply with these changes and the issues this may bring, not to mention the potential costs involved.
“In its announcement, the Government indicated that the implementation of Making Tax Digital would be delayed until 2019 for small businesses. Despite this, the practical implications have not been properly assessed. Government must be clearer on what information is required and that the system is sufficiently tested by farm business owners.
“There is insufficient time available for the industry and HMRC to achieve what is required for this to work.”
Complexity of modern farm businesses
The four UK farming unions believe that farmers will have considerable difficulty due to the complexity of modern farm businesses, two-thirds of which run diversified enterprises, requiring different accounting and tax adjustments and potentially separate income and expenditure reporting.
In addition to this, there is a lack of suitable and registered software that is compliant with the proposed measures.
The unions believe that farming’s seasonality compounds this, meaning that quarterly tax returns provide little benefit to HMRC or farmers.
The CLA, which represents farmers and rural businesses, said it is 'vitally important' to help everyone achieve tax compliance.
“We support new technology which aims to make life simpler for businesses but the government must look at the whole picture before making tax digital," CLA President Ross Murray said.
“Rollout of superfast rural broadband has been too slow and the government’s Universal Service Obligation (USO) of 10Mbps by 2020 is not guaranteed to be met.
“Current broadband technology in the UK means download speeds are faster than upload speeds, so the government must reassure businesses they will not be unfairly penalised as a result of poor connectivity when trying to complete and submit tax information online.”
