Working alongside the National Farmers Union (NFU), we have been instrumental in encouraging HM Revenue & Customs (HMRC) to update its guidance on VAT zero-rating for trees and fruit bearing shrubs.
Previously, under the Agricultural and horticultural crops section in HMRC’s guidance document, any trees and fruit bearing shrubs not listed under paragraph 3.5 were not treated as ‘zero rated’. This meant any grower who had a plant not mentioned in the list was faced with the hefty full standard rate of VAT (20%) on their produce.
Having 90 years’ experience serving the agriculture sector, we’re one of the leading firms of agricultural accountants in the East Midlands. When one of our clients reached out to us regarding their problem - having a number of shrubs not officially named in HMRC’s guidance list - we were only happy to help.
After partnering with the NFU, we were able to approach HMRC’s policy unit regarding this matter which eventually led to a guidance update; removing the words relating to the plants listed in paragraph 3.5 as being an "official list". This now means that growers, including our client, have far less restrictive guidelines from which to work, and any trees and fruit bearing shrubs not featured on the list are no longer necessarily liable to the standard rate of VAT.
The guidance from HMRC has also added a number of new plants to the existing list online, which comes as a huge win for our agricultural clients, and for our company.
“We’re so pleased to have been able to change this policy for not only our clients, but for other growers across the country who may be faced with the same problems.
“Unfortunately, many growers across the UK may not be aware of this prescriptive guidance online and may be unnecessarily paying out VAT on fruit bearing plants and trees without knowing.
“While guidance is not the law, it is HMRC’s interpretation of the law and growers and retailers can face an expensive battle if they zero rate any fruit bearing shrub that isn’t on the list in this guidance.”
If any growers have plants that aren’t featured on HMRC’s guidance list then we advise businesses to approach HMRC under their representative body with evidence that the plants are normally grown in the UK for the production of edible fruit, and are held out for sale for this purpose.
If you would like advice, guidance or support, please get in touch with our specialist team.