Poor prices for milk and grain mean some farmers could face difficulty accumulating enough cash to pay their income tax bill by the deadline of Thursday next, 12 November.

In some cases, difficulties are being added to by delays in payout of the 2015 basic payment and greening. Flow of these direct payments is running slower than the delivery of single payment seen in recent years.

In addition, some farmers are facing a tax payment crux, because of the way income tax is collected. Under the rules, this month’s bill includes a preliminary payment for this year’s tax (2015) plus whatever balance, if any, is due on last year’s figures (2014), now wrapped up by farmers’ accountants. The balance due for 2014 could be high where a farmer’s income increased last year, for instance where milk prices rose in 2014. But the farmer is left paying any high balance out of current cashflow – cut by falling milk prices.

The rules give some protection to taxpayers in that the preliminary amount must be at least 90% of the previous year’s final tax due. Where income is steady from year to year, the balancing amount will likewise be steady and should be in or around 10%. When income rises, a bigger balance can arise 12 months down the road. If prices and cashflow then turn downwards, a squeeze can arise, as now.

In recent months, IFAC accountants has reminded farmers of the need to plan ahead for cashflow to be able to meet 2015 tax payments and pay bills for feed and fertiliser next spring.