Private and confidential

Mark Bingham,

HM Revenue and Customs,

Level 2,

Dorchester House,

Great Victoria Street,

Belfast

BT2 7WF

7 September 2015

Dear Mark,

Income Tax: Extension of averaging period for farmers

Introduction

The Northern Ireland Tax Committee of Chartered Accountants Ireland is pleased to have the opportunity to comment on the above consultation document published on 8 July 2015. Information about Chartered Accountants Ireland and the Northern Ireland Tax Committee are provided on the previous page.

We would be happy to discuss any aspect of these comments and to take part in any further consultations/initiatives in this area that there may be in the future.

The importance of the farming sector in NI

We wish to briefly comment on this consultation. Chartered Accountants Ireland is supportive of any measures in the tax system designed to support the farming sector. Thus we welcome the proposal to extend the averaging period for farmer’s profits from 2 to 5 years from 2016/2017. According to the consultation document, farmers availing of averaging under the current 2 year rule will be immediately able to take advantage of improved averaging. This is also welcomed.

The farming sector is vital to the Northern Ireland economy. The Department of Agriculture and Rural Development’s Policy and Economics Division carry out an annual review of agriculture in Northern Ireland¹. Agriculture comprised 1.4% of gross value added output in Northern Ireland in 2014 compared to 0.6% in the UK overall. The sector provided 3.4% of civil employment (1.3% UK).

However the 2014 report showed that the agricultural income of Northern Ireland farms decreased (Tables 2.1–2.3) considerably in 2014. Cash available to farm families from farming activity was (Table 2.4) estimated to have fallen in 2014 by 17% in that period. Farming businesses in Northern Ireland are experiencing further pressures in 2015 as a result of additional contributing factors such as the weakening of the Euro.

Conclusion

In 2014, the Department of Finance in Ireland held a public consultation reviewing agri-taxation in general. This wide ranging consultation resulted in the introduction of 12 new tax-focused measures aimed at this primary sector². We thus welcome this consultation but suggest that consideration be given to launching a wider consultation on agri-taxation measures in the UK which would maximise the potential benefit to this particular sector and thus the wider economy.

Freedom of Information

We note the scope of the Freedom of Information Act with regards to this submission. We have no difficulty with this response being published or disclosed in accordance with the access to information regimes. This response will be published on our own website and will be available to all of our members and the general public.

Do not hesitate to contact Brian Keegan brian.keegan@charteredaccountants.ie or Leontia Doran leontia.doran@charteredaccountants.ie of this office should you require anything further.

Yours sincerely,

Paddy Harty

Chairman

Northern Ireland Tax Committee

Chartered Accountants Ireland

Source: Chartered Accountants Ireland. www.charteredaccountants.ie.

¹ Statistical Review of Northern Ireland Agriculture 2014, Department of Agriculture and Rural Development Policy and Economics Division, Belfast, March 2015

² Budget 2015: Publication of the Agri-taxation Review, Irish Government Economics and Evaluation Service, Dublin, October 2014