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HMRC internal manual

VAT Food

Food: Items benefiting from the relief: seeds and plants: background and law

Background

Basic guidance on the liability of seeds and plants is given in Notice 701/38, Seeds and plants. VFOOD3400 looks at the legal references to seeds and plants and the reasons for their relief.

Prior to the introduction of VAT, agricultural outputs linked to the production of food were liable to purchase tax. The Government White Paper issued prior to the introduction of VAT envisaged that zero-rating would apply to all food for human consumption.

The agricultural lobby then made representations to Parliament that all agricultural goods linked to the production of food should be included in the zero-rated relief. As a result, the Finance Act 1972 set out a wider range of relief to cover three further categories of goods in the food chain, namely animal feeding stuffs, live animals and seeds and plants.

Law

The legal basis for the zero-rating of plants grown as food for humans or animals is the VAT Act 1994, Schedule 8, Group 1, General items 1 and 2, which provides for zero-rating of:

  1. Food of a kind used for human consumption;
  2. Animal feeding stuffs.

In addition, seeds, bulbs and tubers for producing these food crops are zero-rated under General Item 3:

  1. Seeds or other means of propagation of plants comprised in item 1 or 2.