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British farmer 'dodges bullet' on VAT recovery in Supreme Court victory

A Supreme Court victory for one of the UK’s largest recipients of farming subsidies is being hailed by his accountancy team as a significant win for all farmers.

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British farmer 'dodges bullet' on VAT recovery in Supreme Court victory

The decision will see Frank Smart and Sons, of Torphins, Aberdeen, receive a disputed £1 million in VAT repayments.

 

HMRC had insisted no VAT should be recovered from the business’s purchase of 34,337 hectares of Single Farm Payment entitlements between 2007 and 2012 at a cost of £7.7m.

 

HMRC claimed the entitlements had been bought to increase the amount of subsidy paid each year.

 

Frank Smart, who leads the family business started with 194ha of entitlements relating to his home farm near Aberdeen.

 

His legal team successfully argued in the Supreme Court the money was used to ‘develop business operations’ including repaying a loan, building cattle sheds and constructing a wind farm.


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At the conclusion of the case, where Mr Smart was represented by Scottish advocate David Small, his adviser Glyn Edwards, VAT director with MHA Macintyre Hudson, claimed all farmers had ‘dodged a bullet’ on the grounds HMRC will find it more difficult to restrict VAT recovery in the future.

 

Mr Edwards said: “If HMRC had won, every business in receipt of subsidy could have been subject to a restricted right of VAT recovery.

 

“In farming the likely impact would have been VAT recovery would be restricted, in whole or part, on any costs associated with receipt of subsidy."

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