Check for VAT on wool sales, says NFU

Sheep farmers should check for any tax implications when selling wool to Irish merchants, the NFU has advised.

It has emerged that livestock keepers may be liable to a VAT charge on a sale unless it can be proved that the wool has left the UK within three months of the sale.

HM Revenue & Customs (HMRC) says farmers must ensure that they have both the correct documentation and, more importantly, whether the wool is actually dispatched to Ireland rather than used within the UK. If the wool does not leave the UK at all, farmers must charge and account for VAT on the sale as it is a solely domestic UK transaction.

However, when the wool is shipped to Ireland within three months the sale is zero rated for VAT but farmers should be aware of the rules that apply to ensure they are protected.

NFU livestock board chairman Alistair Mackintosh said: By taking a few simple steps farmers can avoid hassle and potential fines, including interest payments later on.

They should obtain the merchants Irish VAT number and quote this on the VAT invoice raised for the wool supplied. They should also keep copies of any correspondence that shows that the wool has left the UK within three months of it being sold.

Documents must be kept that show information including the supplier and consigner, description of the goods, an accurate value, how it is being transported, the EU route, destination and proof of arrival. An EC Sales List should be submitted to HRMC and the sale must be reported on the VAT return.

EC Sales Lists must be submitted monthly (or quarterly where the value of the goods supplied to other EC member states in the current or previous four VAT quarters does not exceed 70,000).

More information on www.nfuonline.com