One of the country's top agricultural accountants has said UK farmers could do more to capitalise on a lucrative tax break designed to encourage investment in research and development (R&D). Addressing members of the Guild of Agricultural Journalists in Northern Ireland on Thursday (May 13), Seamus McCaffrey said businesses that are registered as companies could avail of as much as 230% tax credit for money invested in R&D. McCaffrey, who specialises in farming taxation matters, said trialling different seed varieties, farm technology, or experimenting with different feeding regimes, cattle genetics or types of lighting (for example, in a poultry house), could all be eligible. "It's very useful but it's important to note that it applies to companies only," he said.
"A surprising amount of R&D is carried out on farms. If a farmer is doing reseeding and he does a bit of trial and error with different types of grass seed, that can constitute R&D. The extra costs involved in that constitutes research and development costs, and could thereby entitle the company to claim a 230% tax credit."

Are my farm trials eligible?

To claim the credit, the company must self-certify in its annual accounts. However, McCaffrey warned the company must also retain evidence of carrying out the trials. "So you just can't decide at the end of the year that the company has a big tax bill and say 'I did R&D' - you'll not get away with that. There must be a bit of resource allocated to it demonstrating and recording the fact research had been carried out," he said. "If, for the sake of argument, we are talking about reseeding, and we are claiming that we are spending money on trials then you could have emails backwards and forwards with the grass seed supplier discussing what kind of research you want to do as evidence - that kind of thing.
"Detailed records must be kept and they must be kept for four years because that's how far back the revenue can ask for them.
"You must also keep evidence of the results. It doesn't matter whether the result is good or bad, it's the fact that R&D has been carried out."

The research must also be applicable to your own farm, so McCaffrey highlights that testing whether research carried out overseas or in different parts off the UK and Ireland applies to your specific enterprise could also be eligible.

"A lot of farmers already do R&D work on the farm but don't realise they are doing it. They often don't realise to raise it with their accountant because they simply didn't know that the R&D work they are carrying out on the farm is eligible for the extra 230%. "Some people imagine or think that R&D means you have to be linked to a university or that you have to have a dedicated research facility - you don't have to have anything like that," he concluded.