The government has been told to ensure that the Inland Revenue and Customs & Excise continue to allow hard-hit farms and rural businesses to defer tax, VAT and other duties to help the countryside recover from the foot-and-mouth epidemic.
Failure to do so could lead to the banks and financial institutions foreclosing on hundreds of undertakings, an independent report has warned.
Ministers have also been urged to find the cash to pay for extending broadband services to the countryside to help farmers and rural businesses make better use of the internet.
Northern Foods Boss Lord Haskins report on Rural Recovery after Foot-and- Mouth-Disease makes clear that the tax authorities hold the key to allowing the countryside to make a come back.
If they drop their sympathetic treatment of farmers and associated businesses such as suppliers and tourists, it would send out the wrong signal to the banks and could trigger a wave of bankruptcies.
The report reveals that the Revenue and the Excise ‘have treated sympathetically those businesses, both farming and non-farming – which have been affected by the outbreak. They have allowed tax, national insurance, and VAT payments to be deferred, without attracting interest where hardship could be shown. By late September, the total of deferred payments was Pounds 160m.’
Banks must maintain sympathy
It goes on to say that the ‘banks must remain the key to business survival and it is essential that they maintain their sympathetic line with their customers’.
Lord Haskins says that in his conversations with them he felt they would do so provided there was continued government support for rural usinesses ‘especially from the Revenue departments. If they were to seek to recover tax too quickly, this would probably harden the attitude of the banks.
Therefore he recommended: ‘The government should make clear that the Inland Revenue and Customs & Excise will continue to take a sympathetic approach, on a case-by-case basis, to the deferral of tax payments by businesses that have suffered from the foot-and-mouth disease outbreak and the measures to control it until the end of the financial year.
‘The additional subsidy enabling local authorities to give relief from business rates without imposing undue costs on local residents should likewise be extended.
‘This will send a positive message to the banks, enabling them to maintain their sympathetic approach.’
Better online services
The report also makes clear that that better on-line services could be the key to the revival of many rural businesses.
And he highlighted tourism as one of he sectors that could make most use of new information technology.
Lord Haskins said in his report: ‘All rural businesses need to be encouraged to take full advantage of the benefits of the internet which in turn will require government to ensure that the providers of broadband will make this commitment feasible.
‘The internet should be of more benefit to farmers and rural businesses that anyone else because it overcomes the geographical problem of doing business from the countryside, offers them unprecedented opportunities to diversify their businesses and enabling them to receive advice on their options and obligations as well as processing their payments to an from government in an efficient way.’
Speaking at a press briefing Lord Haskins said he believed the government would have to bear the brunt of the cost of extending broadband internet services to the countryside but that in terms of preserving and expanding farms and other rural businesses and therefore tax revenues it would be well worth it.
It could also help rural tourist industries improve the quality of their services which was vital to a countryside recovery following foot-and-mouth.
Links
Foot-and-mouth may lead to tax rise
Business Finance – Banks fight foot-and-mouth