Implications of tax on the new single payment (From Gazette & Herald)

Implications of tax on the new single payment

TWO hundred and 50 years ago as he sat "musing amidst the ruins of the Capitol", Edward Gibbon decided to write his epic work on the rise and fall of the Roman Empire.

Of his many perceptive comments on the collapse of that amazing civilization, the most appropriate for our industry today is that "all taxes must, at last, fall upon agriculture."

When one thinks about it, food is probably the only commodity that none of us can do without and therefore taxation, whatever its initial direction, will eventually devolve upon agricultural production. Now there's a thought to exercise the grey matter whilst turning the hay!

As you might have guessed this week's quotation leads me swiftly to consider the implications of tax on the new single payment.

The Inland Revenue have still to clarify much of the detail, but the general thrust of their thinking is now pretty well-known and with that caveat I set out below some guidance.

Capital gains tax - disposals of entitlements either as gifts or sales will be subject to the CGT regime; and as milk quota in 1983 entitlements will have a zero base cost this year.

Most pundits think that entitlements will be presumed to start on December 31, 2004, and that they will be treated as business assets for which taper relief and roll over are available.

It is a thought that the abolition of other livestock quotas this year may create a CGT loss that can be off-set against any capital gains.

Inheritance tax - the Inland Revenue have still to pronounce on various uncertainties to do with inheritance tax, but for the present it seems clear that business property relief will be available to farmers after two years where they are using entitlements in their business. There is still divided opinion as to whether agricultural property relief can apply to entitlements.

Income tax - the receipt of the single payment itself will be taxed as income, but we await a decision as to when the "payment" comes into account for income tax purposes.

The expectation is that 85 per cent of the payment will be deemed to accrue on a daily basis from the date of application which this year was May 16. The remaining 15 per cent of the SP will be recognised at the end of the scheme year, namely December 31.

Other taxes - for VAT if entitlements are sold by themselves then they will be standard rated; but the single payment itself will not be liable to VAT. It also seems that stamp duty land tax will not apply.

The Food Standards Agency is the boss of the Meat Hygiene Service which in turn is the body which implements the EU's stifling regulations that have cost the industry so dearly.

Scientist academic Professor John Krebs has been chairman of the FSA, but this July will be succeeded by Dame Deirdre Hutton, who has been in charge of another quango called the Food Chain Centre.

Yorkshire folk will recall when another member of the Hutton family used to defend our stumps and we can only hope that Dame Deirdre will bat with the same determination. Her first target wants to be to hit as hard as she can the iniquity of employing overseas vets who are inadequately trained, cannot speak English and have no commitment to our industry.

In her last job, Dame Hutton proclaimed: "We got stuck in, tested, proved and are publicising a range of techniques which we believe can deliver a prosperous future for English farming." Brave words that now need putting into practice; and to do it, we wish her good luck.

Deaf ear are obsessed with their idea of introducing table categories upon which to base all compensation for animal diseases in the future. I have no hesitation in saying that it is a hopelessly unfair and inoperable system which will bring a lot of conflict into situations which require maximum co-operation from the farming fraternity.

What our seemingly brainless bureaucrats cannot comprehend is that you are unlikely to get co-operation from farmers whom you are about to abuse and maltreat. To try and base valuation upon age and sex without regard to quality and weight cannot be fair and I am sure trouble is looming.

My valuers' association last week wrote-off making our opposition absolutely clear and suggested the continued use of professionals to act on behalf of the industry.

There are undoubtedly lessons to be learned from the questionable practices forced through during the FMD crisis, but with better supervision and more scrutiny this could quite easily be done. I just hope some sense prevails.

This is a sequel to last week's article on the compulsory requirement for all youngsters who took their driving test after January 1, 1997, to take a further test if they wish to pull a trailer with a total loaded weight of 750 kg.

At the age of 25, my son, Tom, managed to get a test date last week and had to travel across to Wakefield where the only test centre is, and where, believe it or not, there is no phone line.

He had to travel with a mature licensed driver taking his own trailer and was subjected to a one-and-a-half hour practical test in and around the city of Leeds. When booking the test on the phone, he was told he would fail and this duly happened apparently on a technicality. He had unhitched the trailer and put on the trailer brake. The inspector told him to re-hitch the trailer.

Before doing so, Tom duly checked right round the trailer to see everything was in order, but apparently failed to actually put his hand on the brake even though he could see that it was on. This was sufficient for the examiner to fail his £80 test, demand that he retake it at a later date and advise that he should join a two-day training course at £140 per day.

The system smells of being out of touch with the practical world and just another money making scam to manufacture jobs.

Our hearts go out to those who have suffered in the weekend storms around Helmsley and it brings home to us once again nature's power to create indiscriminate damage when roused.

The sudden arrival and force of the rain had to be experienced to be believed.

Despite all the devastation, one shopkeeper's resilient sense of humour shone through in a TV interview last evening. He said that they had been flooded three times in the last five years and now could only get fire insurance but nothing for floods. He commented drily "we'd be alright but it's difficult to set fire to wet carpets!"

I note that the EC are now thinking about changing the labelling legislation to reflect the standard of welfare used in raising the animals for our food chain.

A public survey has revealed that customers are prepared to pay more for food from welfare friendly backgrounds and I hope this is a first step towards insisting that every packet of food, be it on shop shelf or restaurant plate, has to have its country of origin displayed. That and only that will provide a level playing field for British agriculture which is being increasingly disadvantaged by our Prime Minister and his party.

This is another in the Sinnington correspondent series for Comic Relief and tells the story of a poor old dear about my age who fell in Malton main street and couldn't get up. She said she felt a bit wobbly and one of the sympathetic by-standers said: "Have you got vertigo?"

"No" she replied "I live just round the corner."

Forward 167 cattle including 63 bulls, 863 sheep including 319 ewes. Medium steers to 126p EH Allen, Great Barugh, ave 112.9p; heavy steers to 137p GI Marwood, Harome, ave 105.4p; light heifers to 130p W & L Thompson, Middleton, ave 108.8p; heavy heifers to 150p GI Marwood, Harome, ave 107.9p; light bulls to 109p ET Robinson & Son, Sledmere, ave 106.2p; medium bulls to 114p JM Bulmer, Kirkbymoorside, ave 104.8p; heavy bulls to 112p AM Stones, Ebberston, ave 103.5p; black and white bulls to 89p SM Avison, black bull ave 82.3p; standard lambs to 127.6p TE Beevers, Cottam, ave 118.2p; medium lambs to 129.5p GM Midgley, Painsthorpe, ave 119.7p; heavy lambs to 116.3p F Marshall & Son, Harpham, ewes to £50 ave £35.80.

Updated: 13:23 Wednesday, June 22, 2005