The above notice, which deals with the Agricultural Flat Rate Scheme has now been updated.

By registering as a flat rate ‘farmer’, it is not necessary to account for VAT or submit returns, however input tax cannot be reclaimed. The scheme works by the farmer charging and keeping a flat rate ‘addition’ (FRA) when goods or services are sold to VAT registered customers.

The flat rate addition of 4% is not VAT but acts as a form of compensation for losing input tax on purchases. However, it is not intended as reimburse-ment for all the VAT incurred on purchases.

For the purposes of this scheme only, the definition of a farmer is someone who carries on any of the agricultural production activities or agricultural production activities and services which are listed in Section 3 of the notice.

If the value of non-farming activities exceeds the VAT registration threshold; it is not possible to join the scheme.

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