You are viewing 1 of your 2 free articles

You’ll need to join us by becoming a member to gain more access.
Already a Member?

Login Join us now

Farmers incorrectly removed from VAT simplification scheme could be due refund

Farmers removed from the agricultural flat-rate scheme may be entitled to a repayment of VAT, or compensation, from HMRC

Twitter Facebook
Share This

Farmers incorrectly removed from VAT simplification scheme could be due refund

Farmers incorrectly removed from a VAT simplification scheme could be entitled to a refund or compensation, according David Wilson, VAT director at audit, tax and consulting service provider RSM.


Mr Wilson said HMRC ’routinely withdraws’ agricultural flat-rate scheme (AFRS) certificates if compensation received means the farmer gains a much greater net benefit than under normal VAT registration to ‘protect the revenue’.




But an advocate general European Court of Justice Maciej Szpunar has said this could be against the ‘fundamental principles’ of the European VAT Directive.


AFRS is a VAT simplification method intended to remove the administrative burden of normal VAT rules.


Qualifying farmers who join the scheme receive a flat-rate compensation of 4 per cent to the value of their sales instead of recovering the VAT on underlying costs meaning there is no VAT accounting.


“A farmer fulfilling the criteria for participation in AFRS can legitimately expect that he will have the right to access the scheme, and remain in that scheme, irrespective of the actual financial results of that membership in individual tax years,” Mr Wilson said.




He added that while the European Court did not always agree with the opinions of its Advocate Generals, if it were to do so, UK farmers wrongly removed from AFRS would be entitled to a VAT refund or other form of compensation.


Mr Wilson added it also highlighted the question of what would happen to AFRS after Brexit.


“Of course, on leaving the EU, the UK would no longer be bound by EU VAT legislation; the UK could therefore decide to ignore the Court’s findings and await Brexit. This could however result in infraction proceedings and penalties against the UK,” he said.


Another option would to determine that, as the current 4 per cent compensation is far too generous, it should be reduced, or removed.”

Twitter Facebook
Rating (0 vote/s)
Post a Comment
To see comments and join in the conversation please log in.

More News

Trade Secretary wants cheap chlorinated chicken to enter UK

Chlorine-washed chicken, which has been banned in the EU, will be allowed to enter the UK after Brexit if International Trade Secretary Liam Fox gets his way.

Seasonal agricultural workers to be exempt from Government’s migration target

Defra Secretary Michael Gove has suggested seasonal agricultural workers could be exempt from the Government’s target to reduce net migration to the tens of thousands.

'They've appointed a yes man' - Kevin Roberts announced as HCC chairman

It follows criticism from the farming sector of the Government’s selection process.

Royal Welsh Show: Anger mounts towards Defra's Brexit strategy

The Royal Welsh Show was dominated by discussions about what Brexit will mean for the country’s farmers.

Nine points to nail your business plan

You might think you don’t need a business plan, but here’s exactly why you do.
FG Insight and FGInsight.com are trademarks of Briefing Media Ltd.
Farmers Guardian and FarmersGuardian.com are trademarks of Farmers Guardian Ltd, a subsidiary of Briefing Media Ltd.
All material published on FGInsight.com and FarmersGuardian.com is copyrighted © 2016 by Briefing Media Limited. All rights reserved.
RSS news feeds