VAT planning - farmhouses Gwent : Green & Co

VAT planning - farmhouses

It is accepted by HMRC that farmhouses are an integral part of the farm business itself, as farmers need to be available at all times to attend to livestock and safeguard farm buildings and equipment.

However, as the farmhouse provides domestic accommodation for the farmer and his family, there has to be a proportion for private use.

The business can normally claim 70% of the VAT incurred on work if it passes the following tests:

  • the building is a typical working farmhouse;
  • the business is a full-time farming activity; and
  • the work done constitutes repair and maintenance of the farmhouse.

However, the amount of VAT a business can claim is unlikely to exceed to 40% in the following circumstances:

  • if farming is only a part-time activity and the farmhouse is primarily the family home; or
  • if the work done is an extension or alteration of the farmhouse.

Careful consideration needs to be taken when applying a proportion to claim input VAT, and Green & Co can help you decide on an appropriate proportion based on your situation, as each case is different. Please contact us to arrange a free initial consultation to discuss how we can help you.

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