H M Revenue and Customs have now issued their guidance on the tax treatment of losses incurred from the Dairy Farmers of Britain (DFB) collapse. The former members of the Co-op could miss out on up to a £10,000,000.00 in tax relief. Anyone who held loan stock will not be taxed on their losses but there is no tax relief for individual members who held shares at the time that the firm went into administration last year. The vast majority of farmers operating as sole traders or partnerships will miss out, however for any farmers trading as companies, tax relief may still be available on their losses.

DFB was placed into liquidation last year causing hundreds of farmers to have neither buyers nor homes for their milk. Many farmers had hoped that their capital gains tax bills could be offset against the money lost in DFB but with the HMRC's announcement, those individual farmers have discovered that they are not eligible to claim tax relief on their losses. This is mainly because member's capital investments were exchanged for shares in an attempt by the DFB to stave off administration last year. This has come as a blow to all those farmers waiting on the Revenues' decision on the treatment of their losses.

The NFU have expressed disappointment at the HMRC's suggestion that no tax relief will be available on the majority of losses. The NFU are currently seeking to challenge this decision.

If you have any queries in relation to the above or any other agricultural issue please contact Alex Keegan at Bell Park Kerridge on 01900 820800.