Over 90% of farms operate as unincorporated businesses, the majority are VAT registered and many have some form of diversified activity. Their farming income is either excluded from the cash reporting basis, for example because they use herd basis, or they would be denied access to farmers averaging and sideways loss relief if they did use it.

Farming activities are mainly conducted over an annual cycle or longer, and income and expenditure varies considerably from month to month. Farming profits are also particularly susceptible to fluctuation as a result of external factors such as the weather and global commodity prices. There are obviously seasonal peaks too.