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HMRC internal manual

VAT Taxable Person Manual

Agreements which grant the contractor a right over or licence to occupy land

The first question to ask when considering the contract is whether the landowner is granting the contractor or merchant exclusive occupation of the land. If this is the case, the landowner is making a supply to the contractor which is exempt under VAT Act 1994 Sch9 Grp1 item1. If the landowner makes supplies of husbandry to the contractor - for example ploughing, weeding, or the application of fertilisers which the landowner has supplied - these supplies are standard-rated where separately charged. Where the landowner charges an inclusive rental which includes a subsidiary element to cover husbandry services, the whole of the rental is exempt. The merchant markets the crop and is accountable for any tax on that supply.