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Agricultural flat rate scheme

Do minimal zero rated supplies of Hay production and grazing for horses permit registration

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My client has been VAT registered for years. Originally a dairy farmer, he discontinued this and became a plant- supplying hire and operating contractor to another farmer. This activity ( one customer) continued under the previous VAT registration but all supplies were under the VAT registration limit. Activities on his own farm reduced to grazing ( horses belonging to private owners) and occasional sales of hay. Now the one external plant hire customer has ceased trade so turnover for my client is minimal. He has the choice of deregistering voluntarily or to continue the registration, relying on the minimal outputs to qualify him to do so. He is otherwise retired. His self supply charge on deregistration is likely to be material since he has a Land Rover, several tractors, excavators and other heavy plant.

The agricultural flat rate scheme for farmers seems to offer a cost free way out of paying the self supply charge since it is not levied when associated with a VAT deregistration. However whilst supply of hay seems to qualify as agricultural activity, grazing for horses does not fit into the limited permissible activities. What do other readers think about this. Hay sales would be under  two hundred and fifty pounds but grazing would add about three thousand pounds.

Sorry about lack of punctuation, figures or currency signs. This iPad is beyond updating and this is one of its failings.

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By Les Howard
27th May 2020 10:43

The crop production, albeit of low level, seems to be sufficient to qualify the farmer for the scheme.
Can he sell off his assets to allow him to deregister?

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Replying to leshoward:
By KABcraigmore
27th May 2020 11:18

I think he wants to keep his "toys". Even if he has minimal use of them I think it would be a step too far to part with them.
A good thing about deregistration from " normal" VAT registration in favour of reregistering for the flat rate scheme is that the "self supply" aspect is bypassed. He is not required to pay output tax on his stocks.
An annoying point though is that grazing is recognised as a zero rated supply as a farmer yet it does not figure in the permissible activities for the flat rate scheme. Is this an anomaly or is it deliberate?

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