A cattle farming client. who has operated at a miniscule level for many years, has incurred recurring losses. HMRC will soon prevent any tax relief from being allowed as the operation will not be deemed to be commercial. (I have frequently informed the client that, realistically, it isn't!) The business is voluntarily registered for VAT and receives regular VAT repayments because all outputs are zero rated. If HMRC views the activity as "non-trading for profit" will a compulsory VAT de-registration follow? This could be disatrous for the client as VAT previously recovered could then be repayable on various assets which would make a bad situation worse!
Any comments would be appreciated!