Farmers and the agricultural flat rate scheme

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Farmers and the agricultural flat rate scheme
  • Scheme requirements
  • What are eligible goods and services?
  • Linked services
  • How are turnover limits assessed?
  • Joining the scheme
  • Issue of certificate
  • What happens after joining the scheme?
  • Issuing invoices
  • Records
  • More...

Farmers and the agricultural flat rate scheme

It is possible for farmers to elect to use the agricultural flat rate scheme (AFRS) rather than being registered for VAT in the normal way. The AFRS is sometimes also known as the flat rate scheme for farmers or the farmer’s flat rate scheme.

This guidance note provides an overview of eligibility for the scheme and details of how it operates.

Further information on the VAT treatment of farming activities can be found in the Farming and other rural activities guidance note.

For in-depth commentary on the legislation and case law relating to the agricultural flat rate scheme, see De Voil Indirect Tax Service V2.191–V2.198.

Scheme requirements

In order to join the scheme, a farmer must meet the following requirements:

  1. be in business providing goods, or goods and services that are eligible (see below)

  2. not be VAT registered ― if the business is VAT registered and wants to use the flat rate scheme, the business must cancel its existing VAT registration number (see the Cancelling a VAT registration number guidance note)

  3. it has not, in the three years before the date of application for certification:

    1. been convicted of any offences in connection with VAT

    2. been penalised for a VAT offence under CEMA 1979, s 152

    3. been assessed to a penalty for VAT evasion involving dishonest conduct (under VATA 1994, s 60)

  4. (from 1 January 2021) it must have an annual turnover for farming activities below £150,000 to join the scheme but it can stay in the scheme until its annual turnover is more than £230,000

  5. (from 1 January 2021) it cannot be ― or have been in the last 24 months ― eligible to register as a VAT group, registered as a division or ‘associated’ with another person

VAT Notice 700/46, para 1.6; VATA 1994, s 54(1); SI 1995/2518, regs 204, 206

Businesses cannot join the scheme if they:

  1. have a turnover for non-farming activities that is more than the registration threshold for example,

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