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HMRC internal manual

VAT Agricultural Flat Rate Scheme

Operation of the scheme: Charging the flat rate addition

From the effective date of certification, which is shown on the flat rate farming certificate, the farmers can add the flat rate addition (FRA) of 4% to the sale price of any designated goods or services which they sell to their VAT-registered customers. Farmers do not have to charge the addition; but if they choose to do so they can keep it.

Farmers must not charge the FRA to any person who is not registered for VAT, including other flat rate farmers. This is because these people are not in a position to reclaim the amount charged.

Some farming activities which qualify under the scheme would normally be subject to VAT at zero-rate. But farmers who join the flat rate scheme are entitled to charge the flat rate addition on these supplies and all other designated activities. This is because the FRA is not a VAT rate.

If the farmer is involved in other business activities which do not qualify under the scheme, the FRA cannot be charged on these supplies.