Most farmer clients of a large NI-based accountancy firm have opted to use standard computer spreadsheets to comply with digital tax rules.

Lowry Grant from PKF-FPM said 50% of his farmer clients now use spreadsheets to record all sales and costs for VAT. Bridging software is then used to link the spreadsheets to HMRC which allows VAT returns to be submitted. “Only a small number of our clients do the digital link themselves. The vast majority send their spreadsheets to us, and we do the link for them,” he said.

Since April 2019, businesses with an annual turnover above £85,000 have had to keep digital VAT records and submit returns to HMRC through a digital link.

At the start of April 2022, this requirement was extended to all VAT-registered businesses, regardless of annual turnover.

Around 20% of Grant’s farming clients have subscriptions to accounting programmes, such as Sage or Xero. These are used to record business transactions and automatically link to HMRC for VAT returns.

The remaining 30% of his clients keep either a bundle of invoices or handwritten records which are then formatted by PKF-FPM staff to be compliant with digital tax rules for VAT.

“Be careful if you are thinking about getting your accountant to do everything. There is a lot of time involved, so the more work you can do yourself, the cheaper it will be,” Grant told farmers at a meeting in Derry on Monday.

Exemptions

A handful of Grant’s clients have received an exemption to digital tax requirements due to age, poor internet connection, or lack of technology.

He said more clients have applied for exemptions in recent months ahead of the rules extending to smaller businesses from April 2022.

Another option for small businesses could be moving to annual VAT returns, so the process only needs to be completed once a year along with annual accounts.

Grant also suggested that some small farms should stop submitting VAT returns altogether if their typical VAT rebates are less than the cost of complying with digital tax rules.

“Talk your accountant about this. Do not go on a solo run. If you want to use bridging software or an accounting programme, pick one that your accountant is familiar with so you will get assistance if you need it,” he said.