[Question] VAT on Compost

[Chris85]

Hi,

I have a new client that manufactures and sells compost. They are a newly registered VAT company, and I have to advise on whether they should charge VAT on the Compost that they are selling...

As far as I am concerned, they should because they are not selling the raw materials. They buy the raw materials, add products and sell the total product as "compost".

Am I right?

Kind regards,

Chris

[Andromeda]

Hi Chris

Read Schedule 2 of the VAT Act.

If the customer is a farming enterprise in possession of a VAT registration certificate indicating the farming enterprise’s entitlement to purchase the goods listed in Schedule 2 at the zero rate, then your client is permitted to charge VAT at 0% if compost meets the definition of fertilizer.

There are some administrative requirements, but in a nutshell under those circumstances your client should charge at zero rate.