As we slowly come out of lockdown, what are the positives and negatives for the Community?
After two years of something close to chaos, both politically and culturally, there is mounting evidence that the country is slowly edging back to something nearer to normality. Our webinar “Tales from the frontline” at the end of February took soundings in three different regions, arable, livestock and mixed farming (thank you Keith, Will and Tim) and reported on the impact of Brexit/Covid up to that point. Broadly the findings were:
- After initial fear prices have been stable and largely improved over the year
- Self-isolation has always been a way of life
- Wide divergence in the impact on diversified businesses, some thriving and some decimated
- Some problems with foreign labour, as expected
- Change in shopping habits, generally helpful to our members
- Greater public access to farmland has led to problems and opportunities
- Uncertainty probably a greater problem than reality so far
- Home schooling has been a two-edged sword, being a distraction for some, but for those with older children at home “lambing has never been so easy”
As ever, weather has been a bigger issue as anything else – as one speaker put it, “when up to your waist in mud, not having a haircut isn’t really a problem”.
There were also some positives to be found, primarily in the vast and sudden uptake of IT skills. The need to master online conferencing, coupled with the reality of MTD for VAT and the prospect of MTD for tax, has led to acceleration in the speed and quantity of data which clients are producing, which in turn has led to improved management information becoming available.
A further indicator of the move towards normality was seen in the first “real” budget for three years. Although the financing of the Covid deficit remains on the back burner, we have seen a programme of fiscal support added to the previous emergency Covid funding (which is likely to provide practitioners with some interesting computational opportunities over the next few years (welcome back small company marginal CT relief). In the March 23 “Tax Day” we also saw the announcement of some longer-term initiatives which should ensure that we are not short of work when some of these come to be introduced in the next parliament.
Finally, we also saw in March the first useful detail of the new ELMS package, with the announcement of the pilot schemes and a fair amount of scheme detail. Many clients will have signed up for the pilots, and it will be interesting to see how these develop, but at this stage, and subject to final pricing, it seems that the package will take the sting out of the withdrawal of BPS – which is, of course, now in progress.
The withdrawal of BPS takes me back to the bigger picture. There seems to be at least a suspicion that clients are still not taking restructuring as seriously as they might. There can be many reasons for this: Covid is making face-to-face meetings with advisors more difficult, the uncertainty may be making successors reluctant to come forward, the absence of any mention of CGT or IHT reform may be giving a false sense of security and of course historically high prices for cereals, lamb and beef will at present be more than adequate compensation for the initial subsidy cuts (the price increases between the figures quoted in “Health and Harmony” and the end of April for arable farms will be £2-300/acre – over double the entire BPS payment).
In reality, neither prices nor tax treatments are guaranteed, and whilst we can retain some optimism on one, we can be pretty certain that, set against the Covid funding backdrop, the capital tax situation is not going to improve in the foreseeable future. There is a window of planning and succession opportunity now, and like so many things, it should be grasped while stocks last.
Perhaps we are at last seeing a light at the end of the tunnel? Like many, I am always cautious that it may just be an oncoming train.*The views expressed are the author’s and not ICAEW’s.