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HMRC internal manual

VAT Agricultural Flat Rate Scheme

From
HM Revenue & Customs
Updated
, see all updates

Appendices: Cancellation of the flat rate farmer’s VAT registration, and specimen letter

 

VATAFRS0225 and VATAFRS1500explain the context of this page.

Introduction

  1. If a farmer is entitled to join the flat rate scheme and is registered for VAT, treat the VAT 98 as a request to cancel the VAT registration.
     
  2. Once an application has been approved, take action to cancel the VAT registration, in accordance with VATAFRS0225 and VATAFRS0800. The effective date for cancellation from VAT will be the date of certification approved on the VAT 98.
     
  3. Farmers who deregister from VAT to join the agricultural flat rate scheme are to be given reason code 9 on the (This content has been withheld because of exemptions in the Freedom of Information Act 2000) .
     
  4. Remember, the farmer is not required to account for VAT on any stocks and assets on hand at deregistration.
     
  5. If the farmer has been granted exemption from registration in respect of zero-rated non-farming supplies, send a letter reminding the farmer to notify any material changes which might affect his entitlement to exemption. (See specimen letter below.)

Specimen letter to be sent to farmers exempted from registration in respect of zero rated non-farming supplies

Dear

You have recently applied to join the flat rate scheme for farmers, but the value of the non- farming supplies you make is above the VAT registration threshold. However, on the basis of the information you have provided, you have been exempted from VAT registration with effect from …………………… so that you may join the scheme.

Exemption is allowed on the understanding that:
 

  • your non-farming taxable supplies are and will continue to be wholly or mainly zero- rated; and
  • if you were registered, your input tax would be more than your output tax in any 12- month period.

You must notify your local VAT office in writing within 30 days if there is any:
 

  • material change in the nature of your non-farming supplies or
  • material alteration in the proportion of your non-farming supplies that are zero-rated

which will affect your entitlement to exemption from registration. This applies, for example, where, if you were registered, your output tax would be more than your input tax in any 12- month period. If you cannot identify the exact date of the change, then you must notify your local VAT office within 30 days of the end of the calendar quarter in which the change occurred.

There are financial penalties for failing to notify these changes.

Yours