There are many reasons for falling behind on your accounts and records, but what can you do to climb out of that hole, or stop it happening in the first place?
Sitting down to update accounts and records can sometimes feel like the least important thing.
General time pressure is the most common reason for letting paperwork slide, but all sorts of other reasons, such as mental ill-health, a death, divorce, or big financial worries can mean things get out of hand.
The consequences of falling behind can be costly, says Christine Thomson, chair of the Institute of Agricultural Secretaries and Administrators (IAgSA).
“Not submitting tax accounts on time can lead to fines from HMRC,” she warns.
“There are also cross-compliance issues – if you are late reporting movements then you can get an RPA inspection and that can roll on to a penalty in your Basic Payment.”
The institute has a crack-team of trained farm secretaries working with the Royal Agricultural Benevolent Institution (RABI) and The Farming Community Network (FCN), which goes into farming businesses to help get things back under control.
Communications manager at RABI, Rob Harris says: “Farming can be a volatile business with many factors beyond the farmer’s control.
“Often, problems can quickly escalate, but sometimes all it takes is a small amount of assistance at the right time to get things back on track.”
Set yourself a routine for updating accounts and records and stick to it. Frequency will depend on the size and complexity of the business – it could be once a week or one a month.
Cross-compliance should be done daily, depending on your situation.
Technology can help keep things in order and save time – it is also now necessary as HMRC moves tax records over to digital submissions. General accounting software, such as Quickbooks and Xero, can be used and will help you see how much tax you owe as you go along.
For something which understands the specific nature of farming, such as three-year averaging, try agricultural software such as Farmplan, Landmark, and Sum-It. Since April 2019, VAT submission must be digital.
Ensure you have a reliable and strong antivirus software package though, to guard against online fraud. Look out for a new app, currently being developed by Defra, which will allow farmers to record livestock movements at the press of a button.
Trained secretaries and administrators can be a good investment – they can do the work accurately and in half the time, freeing you up to focus elsewhere. The cost is normally viable and sustainable.
A very simple method to keep accounts in order, is to have two folders – one for expenditure and one for income.
If you get behind, particularly by six months or more, don’t be embarrassed to reach out form professional help. Talk to your accountant first, and if things are really bad there are also farming charities which can help (see box right).
Get a professional in as soon as you feel things are starting to get out of hand.
Tax Digital (MTD) plan, sometime beyond 2020 all tax information will need to be submitted digitally using approved software.
It is also expected that submission will be every quarter, although tax will still be paid annually. So it is a good idea to get used to a piece of accounting software which works with MTD.
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