Agricultural flat rate scheme
This notice cancels and replaces Notice 700/46 (April 2011)
Main narrative treatment—V2.191–V2.198.
1.1 What this notice is about
It explains the Agricultural Flat Rate Scheme, who can use it and how to apply to join.
1.2 What's changed from the previous version
This revised notice replaces the October 2012 edition and includes details of the entry and exit criteria for the Agricultural Flat Rate Scheme.
1.3 Force of law
Section 10 contains an example of the VAT 98 form which carries the force of law under the VAT Regulations 1995, reg 204(c).
1.4 Who the flat rate scheme is for
The flat rate scheme is an alternative to VAT registration for farmers.
If you register as a flat rate farmer you do not account for VAT or submit returns and so cannot reclaim input tax. But you can charge and keep a flat rate addition (FRA) when you sell goods or goods and services to VAT registered customers. You cannot join the scheme if the value of your non-farming activities is above the VAT registration threshold.
The flat rate addition is not VAT but acts as compensation for losing input tax on purchases. It is not intended as reimbursement for all the VAT incurred on purchases. The flat rate addition is 4%.
1.5 Definition of a 'farmer'
For the purposes of this scheme only, the definition of a farmer is someone who carries on any of the agricultural production activities or agricultural production activities and services listed in Section 3.
Although the term “farmer” is