Sugar Beet Quotas

Sugar Beet Quotas

Didn't find your answer?

I have a client who has purchased additional sugar beet "quota" what is the correct treatment for this expense should it be revenue expenditure or is it a capital asset
David Warner

Replies (2)

Please login or register to join the discussion.

avatar
By User deleted
06th Sep 2006 13:38

Capitalise & Amortise
A couple of years ago a limited company farming client purchased additional Sugar Beet quota.

The amount was capitalised in the accounts as an intangible asset (the right to produce Sugar Beet and sell it) and then amortised over it's estimated useful life, which in this instance was 5 years per the director's judgement. As the farmer was a Ltd Co CT deduction was allowed. As a partnership or sole trader no deduction against profits would be due, instead deduct costs against subsequent capital proceeds if sold on.

I've never seen purchased quota written off in full against the P&L in it's year of purchase, it's always been capitalised as an intangible asset on the several farms that I've dealt with, and this applies to other quota such as Milk or Beef etc.

The only full-write-off in year of payment that I have seen is for leasing of quota (and from memory it had to be linked to a nominal rental payment as quota was in such cases attached to specific land).

Thanks (0)
By flurrymc
06th Sep 2006 15:46

sugar beet is different
http://www.hmrc.gov.uk/bulletins/tb55.htm#anchor413424

Sugar beet is not a capital asset, according to HMR&C - it is not quota but contract tonnage entitlement. Transactions in sugar beet are revenue.

Thanks (0)