Do farmers have to make profit once every 7 years?

SionSion New MemberRegistered Posts: 6
I understand that farmers must make a profit once every 7 years. Can anyone confirm this for me and possibly give me further information.

Comments

  • johnnyboy987johnnyboy987 Feels At Home Registered Posts: 36
    There's a few comments to the article in the attachment that gives a bit more information but first I have heard of it!

    http://www.accountingweb.co.uk/anyanswers/question/what-business-vat-purposes

    Couldn't find anything on HMRC though...
  • TigerTiger Feels At Home Registered Posts: 63
    Never heard of that one? I've been doing farm accounts for 10 years but then I've never had a continuous run of losses so not been an issue
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    What happens if they don't :(
  • burgburg Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,436
    I've done farming accounts for a while and had to recap myself (as most farmers do make a profit now and again) but here goes.

    Losses (before CA's) occuring in a 6th consecutive year cannot be offset against other income for that year. They are restricted to only be used for future profits occuring from the same trade.

    If you can demonstrate that there is a reasonable expectation of profits in the future than you can get around it but proof may be difficult.

    Once 1 year makes a profit then the 6 years start again.
    Regards,

    Burg
  • SionSion New Member Registered Posts: 6
    Many thanks all. It's the first time ive used the forum, very useful.
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