Value Added Tax Act 1994 section 54

Farmers etc.

Section 54 establishes a flat-rate scheme for farmers, fishermen and foresters, allowing certified persons to remain outside the VAT registration system while enabling their business customers to recover a deemed amount of input tax on purchases from them.

• HMRC may certify persons carrying on designated activities (farming, fisheries or forestry) who meet prescribed conditions, including where a previous certification was cancelled, that a prescribed period has elapsed or other conditions are satisfied
• Supplies allocated to the designated-activity part of a certified person's business are ignored when determining whether that person must or may register for VAT under Schedule 1 or Schedule 1A
• When a certified but unregistered person makes a taxable supply to a VAT-registered business, a percentage of the consideration (set by Treasury order) is treated as if it were VAT, allowing the purchasing business to claim input tax credit
• Regulations may prescribe the form of certification applications and cancellations, require invoices with specified particulars, and impose record-keeping obligations on certified persons