A .C . M O L E & S O N S C H A R T E R E D A C C O U N TA N T S
proactive
farming special
SUMMER 2019
Through all seasons We have been acting as accountants and tax advisers to the West Country farming community for well over a century. Season after season, through good times and bad, we have been there when our clients have needed us. We believe in building strong personal relationships so that we understand our clients and their needs – which might explain why we have acted for many farming families for several generations.
In this increasingly complex world – especially as we face the uncertainty and challenges surrounding Brexit – good advice, based on a real understanding of the issues, is essential.
Taking a strong personal interest gives us a wealth of experience to draw on but also a deep understanding of the issues farming families face. We like to visit our clients and to walk the farm. To us, a set of accounts is not just a set of numbers but a story that needs to be interpreted to make the most of the exercise, whether it is to help drive profitability, to seek funding from the bank or to operate the business tax efficiently.
In this special edition of our regular Proactive newsletter we look at some of the key financial issues facing farmers: how to prepare for a meeting with the bank manager, Making Tax Digital for VAT, the importance of cyber security and the importance of planning ahead to save tax. We also take the opportunity to share the story of some award-winning clients.
We like to visit our clients and to walk the farm.
SUMMER 2019
An uncertain forecast... Paul Bradshaw, consultant to A C Mole & Sons specialising in farm finance writes.
So much seems uncertain these days: Brexit, the global economy, even the weather. These things raise the prospect of severe financial challenges for farmers alongside the practical issues of day to day farm management. For many, this uncertainty will mean a potentially difficult discussion with their bank manager. The outcome will vary from case to case, but whilst banks may have been accused in the past of lending the proverbial umbrella only to take it away when it rains, in my experience they will be well aware of the nature and depth of the challenge farmers are experiencing and will be looking to help wherever possible. Whether it be by way of an increased overdraft limit or flexing loan repayment schedules, discussions will revolve around the farmer’s business strategy and plan of action. How these plans impact on funding requirements will often need to be backed up by budgets and cash flow forecasts.
To obtain the best possible outcome it is important to prepare well for the meeting with the bank and that may require discussions with your accountant and/or consultant beforehand. Communication is key to ensure timely production of the required information and to allow the bank to assess the situation. Often in farming the financial difficulties come along several months after the actual cause of the problem, so as with all aspects of managing the farm, the financial issues need to be considered for several months ahead. There is every likelihood that by time you are with your bank manager discussing the figures, things will have changed yet again. In farming, it pays to keep a close eye on the forecast – whether it is economic, weather or cash flow!
Making Tax Digital for Farmers A C Mole & Sons partner and farm tax specialist David Perry writes. Making Tax Digital (MTD) introduced major changes from 1 April 2019. Since that date, all VAT registered businesses – including farms - with sales above the VAT threshold have been required to maintain their records in digital form, using software and apps to file monthly or quarterly VAT returns online. By the time you read this you may already have filed your first MTD VAT return, but if you are finding the new requirements daunting, we can help. We have guided many clients through the transition to MTD for VAT and have experience of the major brands of software. We file MTD VAT returns on behalf of clients and were among the first firms of accountants to do this.
When the plans for MTD were first announced in 2015, they extended beyond VAT to income tax and – in the case of companies – corporation tax. The government recently announced that MTD would not be extended to these other taxes until 2021 at the earliest. At A C Mole & Sons we believe that software and apps can help to make business administration easier and help to provide better and more timely information. Software that links to the business bank account can save time and apps that capture expense transactions can help to ensure that all expenses are captured and claimed for tax. The transition to digital can be daunting, but once it has been made the benefits can be considerable. As with anything however, change can bring new risks and these have to be factored in, as Paul Bradshaw writes on page 3.
Count to ten
Paul Bradshaw consultant to A C Mole & Sons specialising in farm finance writes.
While digital technology can bring great benefits, it also brings new risks. Fraudsters target tens of thousands of businesses every day with email and telephone scams promising tax refunds or claiming that there are problems with a bank account. While most attempts fail, some succeed. Even the most careful of us can be caught out when we are tired or in a hurry and that is precisely what fraudsters depend on. As the sophistication of the fraudster increases, we as individuals and businesses have to be more alert to the warning signs. Tax refunds for example will never be notified to you via an email from HMRC. You should delete any such email: never click on any link it contains. During my banking career I was contacted from time to time by customers regarding potential frauds because “something just didn’t feel right” and often they were correct. Your bank manager would much rather you call with a false alarm than see you suffer the consequences of a fraud.
If you are using computer equipment there are some basic defences you should have in place. Strong, frequently changed passwords are a must. Obvious numbers, dates of birth, family names or pets’ names should be avoided. Anti-virus software should be installed alongside an effective firewall; security updates should be downloaded regularly. Physical security over computers and mobile devices is important too. Data should be backed up regularly and the backups should be stored securely, preferably off-site. Should all this put you off using computers? Absolutely not: digital technology has the potential to help you operate your farm business more efficiently and more profitably, but you should take prudent precautions. Have a look at the excellent small business guide on the National Cyber Security Centre website. Following the advice it contains could help you to avoid falling victim to a costly fraud.
Plan ahead
A C Mole & Sons partner and farm tax specialist Rob Selley writes. It is never too early to be thinking about what you can do to reduce future tax liabilities. It is always useful to review your trading figures well in advance of the year end to get an idea of how your business has performed in the past 12 months. Using software can make this easier. Pension contributions are a great method of reducing higher rate tax bills while at the same time saving for your retirement. An attractive aspect for many is that 25% of the fund can be withdrawn tax free when you reach the age of 55. The Annual Investment Allowance (AIA) allows a 100% tax write off on investment in most plant and machinery.
The limit was extended to £1 million from 1 January 2019, but difficulties can arise if assets are purchased on finance but not brought into use by the year end. The AIA rules are complicated and the date of acquisition can also be critical: you should always seek advice before, not after, making the purchase to avoid unpleasant surprises. Bringing forward any major repair work before the year end can also be a useful way of accelerating tax relief. Finally, it is always advisable to get your records to us as early as possible. You will then be able to plan for any tax liabilities well in advance and you may be able to reduce any payments on account. Most importantly it gives us the best chance of giving you proactive advice.
Award winning clients
Adrian Cox (pictured here holding the trophy with his wife Jenny and father Stephen - his mother Jeanette was unfortunately not available on the day the photo was taken) recently won the prestigious Tesco Sustainability Dairy Group (TSDG) Farmer of the Year award. Adrian was selected from over 700 farmers across the UK who have milk contracts with Tesco. Having been assessed on the basis of quality (milk quality, cleanliness etc.), value (carbon footprint, consistency of supply), innovation (soil and waste management, environmental factors), service (school visits, workshops, open days) and having finished in the top 4, the farm was then subject to a visit and review by a panel of judges, including last year’s winner. The family farm just over 400 acres of land which is a mix of owned, rented and grass keep. They run 160 dairy cows plus followers and a beef herd with a total head count
at any one time of around 420. All the family undertake roles within the business and contribute to its success. The farm was taken on originally by Adrian’s grandfather in 1966 and A C Mole & Sons are proud to have had a relationship with the family that goes back to the 1970s. Adrian commented “We have had an excellent long-term relationship with A C Mole & Sons and have valued the input from Rob Selley and his predecessors, especially when we have carried out restructuring of our business. Their support and proactive advice has been truly beneficial” We look forward to supporting the family, and indeed the next generation, as they take their business forward.
Meet the team
A C Mole & Sons partners David Perry and Rob Selley head the team. David Perry is both a Chartered Accountant and Chartered Tax Adviser and specialises in advising on farm and land related tax issues. Rob Selley is a Chartered Certified Accountant, a farmer’s son and has his roots in the farming community. Paul Bradshaw is a consultant to the firm and has a lifetime’s experience in the banking sector.
A .C.MOLE & SONS
CHARTERED ACCOUNTANTS CHARTERED TAX ADVISERS
E. info@acmole.co.uk www.acmole.co.uk
y David Perr
Rob Selley
Paul Brad shaw
Supporting them is a team with many years of practical experience. The team can be contacted on 01823 624450 or by email: DavidPerry@acmole.co.uk RSelley@acmole.co.uk PBradshaw@acmole.co.uk
Taunton Office: Stafford House, Blackbrook Park Ave, Taunton, Somerset TA1 2PX T. 01823 624450 F. 01823 444533