I’m pulling my books and records together for the accountant. What do they actually need and why?
I want to make sure I’m doing things right, not paying more tax than I should, and not leaving myself exposed if the Revenue Commissioners ever comes asking questions about my accounts.
With my paperwork piling up, what records really matter? What’s essential for me to keep? What can cause problems if it’s missing? What’s your advice?
ANSWER: You’re not the first farmer to say that – and you won’t be the last. But while farming has always involved a fair bit of common sense and trust, Revenue looks for something a bit more solid than the back of an envelope. Good records are the foundation of your tax return, and they protect you just as much as they help your accountant.
Your accountant isn’t looking for paperwork for the sake of it. They need clear, complete records to make sure all your income is correctly returned, every allowable expense is claimed, and that you stay on the right side of Revenue if questions are ever asked.
Start here
Bank statements: the starting point is always your bank statements. These show exactly what money came in and what went out during the year – sales, grants, expenses and loan repayments. Ideally, the farm bank account should be in the same name as the herd number. Where accounts are mixed or in the wrong name, it can cause real problems, particularly if Revenue ever reviews the file.
Sales and income records: invoices or statements for livestock sales, milk cheques, grain dockets and any other sources of farm income are essential. This is what your taxable income is based on. Missing sales can look like under-declaring income, even if it’s an honest mistake, and that’s the sort of thing that can trigger interest, penalties or an audit.
Purchase invoices and receipts: feed, fertiliser, contractor bills, vet fees, repairs, electricity, insurance – if it’s a farm cost, it needs to be backed up by a receipt or an invoice. These expenses reduce your taxable profit, but only where they can be backed up by paperwork.
Grants and scheme payments: basic income support, eco-schemes, ANC and other payments must all be included as income. Your accountant needs the payment statements to make sure they’re returned correctly. Revenue has challenged cases where payments didn’t match the name or herd number, so accuracy here really matters.
Machinery and running costs: fuel, repairs, servicing, insurance and road tax on farm vehicles and machinery are often allowable. Clear records allow your accountant to split business and private use correctly and make sure nothing is overstated or missed.
Payroll records: if you employ help on the farm, even part-time or seasonal, proper payroll records are vital. Wages, PAYE and PRSI must all be reported correctly. Errors here can quickly lead to interest and penalties, so tidy records are essential.
Loans and interest: loan agreements and annual loan statements are important, particularly where interest is deductible. Without these, relief can easily be missed.
VAT records: whether you’re VAT-registered or operating under the flat-rate farmer scheme, VAT records are needed to make sure returns are right and refunds are maximised where available. Poor VAT records are a common cause of under or over-payment.
Capital purchases: big items like tractors, machinery and farm buildings usually qualify for capital allowances over a number of years. Your accountant needs the purchase invoices to claim this relief properly. Without them, valuable tax deductions can be lost.
Stock records: livestock numbers and stock values at the start and end of the year feed directly into your profit calculation. They’re also needed to claim stock relief where available. Rough estimates can lead to incorrect profits and problems down the line.
Deadlines and penalties: income tax returns are due by 31 October each year, with a short extension if you file and pay through ROS. Miss that deadline and surcharges apply – 5% of the tax due if you’re late, rising to 10% where delays continue, subject to maximum limits. On top of that, interest is charged on unpaid tax on a daily basis, and late filing increases the risk of a Revenue audit.
Failure to keep proper books can result in fines, the disallowance of expenses, and further penalties if income or expenses are found to be incorrect during an audit.
Marty Murphy is head of tax at ifac, the professional services firm for farming, food and agribusiness.
Marty Murphy, head of tax with ifac.
Your accountant needs clear records to file your return correctly and protect you if Revenue queries it.Missing paperwork can mean higher tax, lost reliefs, or penalties.Bank statements, sales records, receipts, grants, stock and VAT details are the core documents.Good records save money, reduce stress, and lower audit risk.
I’m pulling my books and records together for the accountant. What do they actually need and why?
I want to make sure I’m doing things right, not paying more tax than I should, and not leaving myself exposed if the Revenue Commissioners ever comes asking questions about my accounts.
With my paperwork piling up, what records really matter? What’s essential for me to keep? What can cause problems if it’s missing? What’s your advice?
ANSWER: You’re not the first farmer to say that – and you won’t be the last. But while farming has always involved a fair bit of common sense and trust, Revenue looks for something a bit more solid than the back of an envelope. Good records are the foundation of your tax return, and they protect you just as much as they help your accountant.
Your accountant isn’t looking for paperwork for the sake of it. They need clear, complete records to make sure all your income is correctly returned, every allowable expense is claimed, and that you stay on the right side of Revenue if questions are ever asked.
Start here
Bank statements: the starting point is always your bank statements. These show exactly what money came in and what went out during the year – sales, grants, expenses and loan repayments. Ideally, the farm bank account should be in the same name as the herd number. Where accounts are mixed or in the wrong name, it can cause real problems, particularly if Revenue ever reviews the file.
Sales and income records: invoices or statements for livestock sales, milk cheques, grain dockets and any other sources of farm income are essential. This is what your taxable income is based on. Missing sales can look like under-declaring income, even if it’s an honest mistake, and that’s the sort of thing that can trigger interest, penalties or an audit.
Purchase invoices and receipts: feed, fertiliser, contractor bills, vet fees, repairs, electricity, insurance – if it’s a farm cost, it needs to be backed up by a receipt or an invoice. These expenses reduce your taxable profit, but only where they can be backed up by paperwork.
Grants and scheme payments: basic income support, eco-schemes, ANC and other payments must all be included as income. Your accountant needs the payment statements to make sure they’re returned correctly. Revenue has challenged cases where payments didn’t match the name or herd number, so accuracy here really matters.
Machinery and running costs: fuel, repairs, servicing, insurance and road tax on farm vehicles and machinery are often allowable. Clear records allow your accountant to split business and private use correctly and make sure nothing is overstated or missed.
Payroll records: if you employ help on the farm, even part-time or seasonal, proper payroll records are vital. Wages, PAYE and PRSI must all be reported correctly. Errors here can quickly lead to interest and penalties, so tidy records are essential.
Loans and interest: loan agreements and annual loan statements are important, particularly where interest is deductible. Without these, relief can easily be missed.
VAT records: whether you’re VAT-registered or operating under the flat-rate farmer scheme, VAT records are needed to make sure returns are right and refunds are maximised where available. Poor VAT records are a common cause of under or over-payment.
Capital purchases: big items like tractors, machinery and farm buildings usually qualify for capital allowances over a number of years. Your accountant needs the purchase invoices to claim this relief properly. Without them, valuable tax deductions can be lost.
Stock records: livestock numbers and stock values at the start and end of the year feed directly into your profit calculation. They’re also needed to claim stock relief where available. Rough estimates can lead to incorrect profits and problems down the line.
Deadlines and penalties: income tax returns are due by 31 October each year, with a short extension if you file and pay through ROS. Miss that deadline and surcharges apply – 5% of the tax due if you’re late, rising to 10% where delays continue, subject to maximum limits. On top of that, interest is charged on unpaid tax on a daily basis, and late filing increases the risk of a Revenue audit.
Failure to keep proper books can result in fines, the disallowance of expenses, and further penalties if income or expenses are found to be incorrect during an audit.
Marty Murphy is head of tax at ifac, the professional services firm for farming, food and agribusiness.
Marty Murphy, head of tax with ifac.
Your accountant needs clear records to file your return correctly and protect you if Revenue queries it.Missing paperwork can mean higher tax, lost reliefs, or penalties.Bank statements, sales records, receipts, grants, stock and VAT details are the core documents.Good records save money, reduce stress, and lower audit risk.
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