Tax Deadline of 31 January now looming for Rural Businesses, say Saffery Champness

Few rural businesses, and not least farms and estates, look forward to the annual formalities of the Self Assessment tax return. However, the 31 January deadline – by which online tax returns must be filed and outstanding tax liabilities settled – is now looming. For self-assessment taxpayers who pay on account in two instalments, which will include many rural entrepreneurs and self-employed individuals, the first tax payment on account for the 2010/11 tax year is also due by 31 January. With less than two weeks left until the deadline, the Landed Estates & Rural Business Group of Saffery Champness warns that missing the 31 January cut-off date could be costly but there is still time to plan your cash flows.

The current economic situation has forced the Government to push for a tougher regime, with a strong emphasis on tax collection. Late returns incur an automatic fine of 100 as well as interest chargeable on any unpaid tax. Moreover, under a pilot scheme, HMRC is using private debt collection agencies normally employed by credit card and utility companies.

Andrew Arnott, a partner of Saffery Champness Landed Estates & Rural Business Group, comments: In these difficult economic times, it should come as no surprise that HMRC is tightening up the tax collection regime.

While some taxpayers may accept interest charges,  as they are already borrowing funds, they do need to be mindful of the 5 per cent surcharge payable, if the  balance of their 2008/09 tax bill has not be paid by 28 February.

Many rural businesses squeezed by the recession have voiced concerns about meeting tax payments, but entrepreneurs and business owners who have experienced reduced profits in the last year still have time to reduce their tax payment due to HMRC on 31 January.

Business owners, who are navigating difficult economic times and experiencing lower margins, may also be concerned about their first payment on account for the 2010/11 tax year. Payments on account are based on the previous years income and therefore could be too high if profits have fallen in the current year. A reduced payment could help with cash flow for a business owner who has suffered a downturn and is feeling the heat in the current economic climate.

Saffery Champness explains that any reductions are in respect of the entire income received and not solely from trading. Accordingly, taxpayers need to be careful in making underpayments as they will be subject to interest.

• Saffery Champness has 58 UK partners and more than 400 staff, with nine offices in the UK (including Scottish offices in Edinburgh and Inverness) and one each in Guernsey and Geneva. The firm celebrated its 150th anniversary in 2005, after the firm was founded in 1855 by Joseph John Saffery. For further information about the Company, please visit www.saffery.com
• Saffery Champness has worldwide associations in over 100 countries through its membership of the global association Nexia international.
• The Landed Estates Group is headed by a team of 15 partners who advise landowners, agricultural and rural businesses on financial and tax matters, particularly capital taxes and VAT.