Seeds – another VAT liability dispute

My client was selling animals feeds and was contacted by an HMRC officer who wanted to assess the client’s business.

The officer looked at one of the seed mixes, which my client had treated as zero-rated, and decided it was standard-rated. This clearly had implications for my client, who would have to increase his prices or cut his margins – or both.

I researched the nature of the mix, which combined grass and sorghum.

From my researches I was able to identify that sorghum was itself classified as a grass. HMRC’s policy is to zero rate all grass, even where it is to be used for non-food purposes, such as lawns.

When the botanic classification of sorghum was explained, HMRC backtracked and the seed mix remained zero-rated.

If you have a product and are unsure about your VAT position, or if HMRC comes calling, please get in touch for help and advice.

To discuss how this may affect your clients or your business, or to talk about a VAT issue in general, please get in touch.
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