SPS – Accounts and Tax Recognition

From the 2008 scheme year, farmers and growers will be required to have the land used to support their single payment claims at their disposal on just one day. In the UK, that day will be 15 May. This replaces the previous requirement for farmers to have land at their disposal for a period of ten months.

The accounting institutes still have to issue formal guidance on this, but we understand that it is most likely that the trigger point for recognition in financial accounts of the appropriate portion of the 2008 single payment will also be changed to 15 May rather than as now the end of the chosen ten-month basis period. Depending on the interaction between the various dates, the change could well result in more than 12 months' Single Payment being recognised in this year's accounts with a corresponding acceleration of income tax and corporation tax liabilities.

The NFU has written to the Treasury asking for a relief to be introduced to spread the accelerated amount over three years for tax purposes. We have not yet received a reply. Farmers and growers should review their positions and any possibilities for planning to mitigate the effect of the change with their own professional advisers.