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HMRC internal manual

VAT Agricultural Flat Rate Scheme

HM Revenue & Customs
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Farmers’ groups and co-operatives

When farmers sell produce through farmers’ groups and co-operatives, the goods - for example grain - are combined with the produce of other farmers. The buyer then has no way of knowing whether a flat rate farmer has supplied any of the goods.

In these cases, the person buying the goods should pay the farmers’ group only the price agreed for the agricultural produce, without the flat rate addition. The farmers’ group should instead pay the 4% addition to flat rate farmers, when the proceeds of the sale are shared out. The farmers’ group can then reclaim the amount charged as though it were input tax, when the group submits its normal VAT return.