Making Tax Digital: A Farming Challenge

8th November 2018

For many farmers, as with all businesses with a turnover above the VAT threshold of £85000, HMRC’s Making Tax Digital (MTD) initiative is rapidly becoming a reality. With an implementation date of April 2019, farming businesses in general have five scant months to source accounting software which will meet the revenue’s requirements of records not only being maintained digitally but also a digital link being used to transfer data from one record to another.

It is worth noting that larger and more complex farming businesses may benefit from a deadline extension which was announced at the recent budget. For example if a farming business currently runs the farm shop or holiday lets as separate entities within a VAT group then they can benefit from a new implementation deadline of  1 October 2019. However it is anticipated majority of farmers will be caught by the earlier April 2019 deadline.

Whilst digital record-keeping and online returns are already a way of life for many farmers; the step up to the seamless reporting required by the making tax digital initiative could prove a problem to those in rural areas with poor internet connections. For example, we recently had feedback from one farmer who regularly needs several goes at submitting their VAT return as their broadband connection is slow and falls over regularly. And whilst there is a potential exemption available in cases where online submission is “not reasonably practical due to age, disability, remoteness of location or other reason,” a Farmers Weekly report from October commented that HMRC were unable to process such applications at the current time.

One potential lifeline may be found in VAT notice 700/22 which was published on 13 July 2018. This commented that HMRC will accept a digital link as emailing a spreadsheet containing digital records to a tax agent or transferring a set of records on to a portable devise such as a flash drive and giving this to the tax agent. This could enable farmers to maintain digital records; with processing and submission being carried out by their accountant or tax agent. Farmers would still however have to maintain their records on acceptable digital software.

Fast internet link or not, MTD for VAT does require action now if farming businesses are to be ready by the 2019 deadline.

Commenting on the initiative Thompson Jenner LLP Partner Jon Westley said “MTD for VAT brings a unique set of challenges for the farming community; including sourcing appropriate software and understanding how best to combine input and output tax from multiple activities into a single return.”


If you would like to find out more or meet to discuss the MTD for VAT requirements and the cloud accounting services which we are able to provide, please contact Jon Westley or one of our Partners on 01392 258553 or 01395 279521 to arrange a free initial meeting.




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