‘Plan, don’t panic’ is the advice to farmers facing a tax bill in a few weeks’ time.
T Charles Bryant, partner of Brown & Co, says with most arable and dairy incomes affected by poor commodity prices and relatively high input costs, the bill will be unwelcome news.
He said: “Because the bill will be based on the profit and loss account of a decent 2013/14 trading year, it could place some businesses under cash flow pressure, especially given the seasonal flow of feed, fertiliser and fuel invoices.
“The trick is to plan, not panic, and seek advice from those with an objective perspective on what working capital your business will need.”
He said that the default option is usually to seek an extension to the overdraft facility, adding: “But remember this will be a negotiation where the outcome – how much and at what margin – is informed by the strength of the recent set of farm accounts, amongst other things. It is also likely to involve an annual negotiation with the bank manager.”
He said seeking advice from someone with an objective perspective on working capital needs offered real benefit.