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HMRC internal manual

VAT Food

From
HM Revenue & Customs
Updated
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Items benefiting from the relief: animal feeding stuffs: grazing rights

Basic position

Grants of grazing rights (the right to allow someone else’s animals to graze on your land - also known as grass keep lettings) is both the granting of a licence to occupy land and a supply of animal feeding stuffs (grass).

In that situation, the supply of animal feed takes precedence over the supply of a licence to occupy, and the supply is zero-rated. You can identify a grant of grazing rights by examining the contract, which will clearly limit the grantee’s rights over the land to grazing only.

Grazing rights are usually negotiated according to the area of pasture involved. In some parts of the country, while the contract is ostensibly for grazing only, it is the custom for the landowner to provide an element of shepherding or oversight as well. If this oversight extends to more than a seen daily or seen twice daily routine, the supply may be of the keep of animals rather than grazing (see VFOOD3140).

Agistment

Agistment is normally a short-term arrangement for the keep of farm animals. Typically, it arises when a dealer or butcher, who has no facilities of his own, acquires animals which he wants to keep for a week or two until he can sell them or slaughter them. The agister agrees to feed and care for the animals during that period. Agistment is therefore a form of keep and a standard-rated supply.

DIY livery

This is an arrangement where there is a genuine supply of grazing rights or other feed, together with a separate supply of stabling (an exempt supply of rights over land, unless the supplier has opted to tax). It can be said to fall mid-way between a supply of grazing rights and a supply of keep. If the conditions set out in Notice 701/15, Food for Animals are met, the arrangement consists of separate supplies, each liable at the relevant rate of tax, and apportionment of the consideration is appropriate.

As there is less of a distinction between keep and DIY livery, it is particularly important before issuing any assessment to be sure that the necessary elements of care are present: see VFOOD3140.

DIY livery charges are normally negotiated according to the stabling area rented, and the number of animals involved, or as a single inclusive amount per head.