Contract work - foot & mouth clean up

Contract work - foot & mouth clean up

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A farmer was affected by foot and mouth and lost all his animals. He supplemented his income by contract work - helping others clean up.

Income from this source was some £60,000 and this also happens to be the profit for the year.
Should it be a "separate business?" Can "farmers averaging" apply if left in the accounts?

Kevin Salter

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By AnonymousUser
28th Mar 2002 14:16

Well...
I have always treated contracting income as farming income and never had an averaging claim refused yet. I don't know if this is strictly correct but I have never even thought about it in 24 years' practice, so probably the Revenue haven't either.

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By michaelblake
28th Mar 2002 15:55

It cannot be profits from farming
Farming is defined (in a roundabout way) at TA 1988 Section 832 as the occupation of land for the purposes of husbandry.

Husbandry is not defined but its ordinary meaning is taken to be the growing of crops or raising of livestock.

A farmer carrying out cleaning up work on someone elses land will neither be occupying that land nor carrying out acts of husbandry, therefore he is not farming.

It is often mistakenly thought that farmers who farm their own land and also carry out farm contracting work on others land are carrying on one trade of farming. They may be carrying on a farming trade on their own land but they are not carrying on a farming trade on the other land that they do not own.

Although they may be carrying out acts of husbandry on this other land they are not "occupying" the land. Under a normal contacting agreement they are allowed on to the land by way of licence, and the land owner remains the occupier. The profits of the trade would therefore be those of a seperate trade of contract farming, and the profits cannot be averaged with farm profits.

In practice if the profits from contracting are small in relation to farm profits and are unaffected by averaging the Revenue do not object to one set of accounts covering both activities.

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