No exclusions

VAT flat rate scheme for farmers

The taxpayer was a family farming partnership in Northern Ireland that reared beef cattle. In May 2004 it joined the VAT flat rate scheme. In October 2012 HMRC cancelled the flat rate scheme certificate because the partnership obtained a much greater net benefit under it than under normal VAT registration (Notice 700/46).

The First-tier Tribunal dismissed the taxpayer’s appeal.

On 16 March 2016 the Upper Tribunal referred the matter to the Court of Justice of the EU. It answered the questions in October 2017. First it stated the legislation should specify any exclusions from the flat rate scheme for farmers. Second farmers who recover more under the scheme than they would were they subject to the normal VAT rate could not be excluded.

As a result Mr Justice Nugee in the Upper Tribunal said the taxpayer’s appeal should...