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HMRC internal manual

VAT Business/Non-Business Manual

Clubs and associations: agricultural co-operatives

Agricultural co-operatives are commonly formed to improve agricultural production and marketing. They are normally incorporated under the Industrial and Provident Societies Act 1965. They are normally, therefore, companies with limited liability.

An example of a co-operative is where a number of VAT-registered farming businesses join together to form a society. They use their combined financial resources, which come from the purchase of a number of shares by each member, to carry out certain trading activities. These activities may include making taxable supplies of storage, grading of produce, or consultancy.

Where there is:

  • a genuine agricultural co-operative operating as a business rather than a club or association;
  • the payments to the co-operative are for the benefit of a share in the ownership of the co-operative; and
  • the payments to the co-operative are not part consideration for the benefit of enjoying any facilities

such payments are outside the scope of VAT.