Commentary

V6.255 Liability of supplies and activities of farmers and landowners

Part V6 Business by business

V6.255 Liability of supplies and activities of farmers and landowners

Farmers and landowners

V6.255 Liability of supplies and activities of farmers and landowners

Introduction

This section and V6.256 outline some key VAT issues of relevance to farmers and landowners. This section looks at the liability of supplies and activities of farmers and landowners including core activities like the production of food. It also covers other activities such as arranging shoots and when the farmer or landowner will be acting in the course or furtherance of business. Paragraph V6.256 examines VAT recovery and other practical points likely to challenge those operating in the sector. It includes discussion of topics such as when VAT can be recovered on expenditure on farmhouses and in relation to traded payment entitlements under the basic payment scheme. It also considers business structures in the farming sector and introduces the agricultural flat rate scheme.

Liability farmer's core activities

The principal activities of farmers engaged in livestock, arable, dairy or mixed farming give rise to zero-rated 'food'. Most supplies of food or animal feed by farmers will fall within one of the following categories:

  1.  

    •     Food of a kind used for human consumption.

  2.  

    •     Animal feeding stuffs.

  3.  

    •     Seeds or other means of propagation of plants.

  4.  

    •     Live animals of a kind generally used as, or yielding or producing, food for human consumption.

The zero-rating for food is covered in detail at V4.217–V4.225.

Live animals

The extent of zero-rating for the supply of live animals is described at V4.225. HMRC's detailed internal guidance on live animals is found in VFOOD3600.

Zero-rating will

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