Vat on 'pig slurry' - palatable subject I know!

Vat on 'pig slurry' - palatable subject I know!

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Apologies for distasteful subject - particularly around lunchtime!

We have bought in some 'pig slurry' for use in an Anaerobic Digester plant.

All the other 'ingredients' that we buy in - maize, grass, potatoes etc are subject to standard vat so I thought that the pig slurry would be standard rated.

As we 'self bill' the farmer I have added VAT to the invoice but the farmer is now querying whether VAT should be applied.

Looking forward to receiving any help anyone can give.

Many thanks. 

Replies (6)

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By spidersong
21st Aug 2014 13:25

No reason not to..

...however I might be querying some of the other stuff.

Basically to not charge VAT you need a reason NOT to. In most cases where a supply takes place in the UK that reason would be that the supply is exempt or zero rated.

A quick look through the relevant schedules would soon disabuse anyone of the idea that 'pig slurry' could be zero rated or exempt:

Childrens Clothing? - wrong just wrong

Financial Services? - I know some bankers are described as pigs in..., but no

Healthcare? - Only if he has a vastly different idea of medicine to mine

etc. etc.

His query probably comes from the fact that most of a farmers sales are zero rated as food, including the actual pigs themselves. However he's not supplyig anything like food here and so it's standard rated.

However Maize and potatos are food stuffs and would normally be zero rated so might be worth querying. However I assume in this case that they are not in a condition 'suitable for human consumption' (or for use as animal feedstuffs), or they are held out for sale specifically as fuel, which does move them back to being standard rated.

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By Steve Kesby
21st Aug 2014 13:29

4%

? :)

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By spidersong
21st Aug 2014 13:54

Good point Steve

...but even most of the farmers I've met would probably remember to mention it if they were on the Agricultural Flat Rate when they raised the query, and I've met my fair share of farmers here in Sunny (and not so sunny) Suffolk. (I've also smelled my fair share of 'pig slurry' over the years; Proust can keep his madeleine cakes, that smell's one of the things that takes me back to my youth)

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By pawncob
29th Aug 2014 17:22

It's food!

It may be slurry to you, but to all the microbes etc. in the Anaerobic Digester, it's food.

Zero Rate it and let HMRC challenge it if they EVER inspect.

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By shoshana
29th Aug 2014 18:48

It's not food for VAT purposes

To be zero-rated (or exempt and reduced-rated for that matter), the item must fall squarely into one of the Groups set out in the legislation.

Try as I might, I cannot see how the pig slurry falls squarely into the definition of animal feeding stuffs within it ordinary meaning.

On the subject of other inputs into digester, if they meet the criteria as 'food of a kind used for human consumption' set out in Schedule 8, Group 1 Item 1, it does not matter that they are not actually being used for that purpose and they should indeed be zero-rated. In this matter, I disagree with @spidersong so I would venture that maize and potatoes should be zero-rated.

While many animals eat grass, in this case it is not an 'animal feeding stuff' because the wording in Schedule 8, Group 1, item 2 does not use the wording 'of a kind used for', so it actually has to be used for animal feed. Here it is being used as an input to generate energy, not as food.

Hope this helps.

Malcolm

Malcolm Greenbaum

Director, Greenbaum Training and Consultancy Limited

IFRS, US GAAP, UK GAAP, UK tax and VAT

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By DMGbus
29th Aug 2014 19:20

Standard rated

I view pig slurry as a fertiliser product and therefore standard rated.

On the other hand seed for food crops are zero rated, which pig slurry clearly is not.

I don't regard pig slurry as animal feed either, so again not zero rated.

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