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An article by Jeremy Moody in Taxation, 23 August 2001 at page 529 discussed tax issues relevant to the current opportunity for sugar beet growers to sell all or part of their contract tonneage entitlement. It was reported that the Revenue was to announce its view on the matter in due course and it was expected that the view would be that the disposal proceeds are revenue items.
The Revenue's website now contains an announcement confirming this view as follows:
An article by Jeremy Moody in Taxation, 23 August 2001 at page 529 discussed tax issues relevant to the current opportunity for sugar beet growers to sell all or part of their contract tonneage entitlement. It was reported that the Revenue was to announce its view on the matter in due course and it was expected that the view would be that the disposal proceeds are revenue items.
The Revenue's website now contains an announcement confirming this view as follows:
'We have been asked about the taxation consequences for farmers who sell or buy contract tonneage entitlement. We consider that the transactions are on revenue account, with the result that amounts received are taxable receipts of the trade and amounts paid are deductible in computing profits.'
The reason given for this view is that sugar beet contracts are not quotas but are more akin to annual personal contracts. As such they are part of the ordinary arrangements farmers make for disposing of their products. Only where a contract is one the cancellation of which would effectively destroy or cripple the whole structure of the taxpayer's profit-making apparatus does it fall to be treated as a capital asset and that is not the case with contract tonneage entitlements.
The statement confirms that, where under generally accepted accountancy practice payments for contract tonneage entitlement are amortised over several accounting periods, the allowable expense for tax purposes is the amortisation charge to profit and loss account in each period.
