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Is the sale of grass (to be used by a riding school as animal feed) exempt from VAT?

16 July 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Is the sale of grass for horse feed classified under raw materials and thus exempt from VAT?

A farmer sells grass for horse feed to a riding school, which does not have a VAT certificate indicating that all grass purchases are exempt from vat. The farmer is a VAT vendor.  

A: There is no exemption from value-added tax that would apply where a registered vendor (the farmer) supplies "horse-feed” to the recipient (the riding school).  We do agree that the rate of zero per cent is not available either.  Section 11(1)(g) provides that a supply may be zero rated if the supply is of goods used or consumed for agricultural, pastoral or other farming purposes as are set forth in Part A of Schedule 2, provided such supply is made in compliance with such conditions as may be prescribed in the said Part.  Item 1 in paragraph 1 of the Schedule refers to animal feed, but then prescribes the following condition: 

"The provisions of paragraph 1 shall apply only if—

(a) the Commissioner, in respect of a vendor registered under this Act, is satisfied that that vendor, being the recipient of any such goods, carries on agricultural, pastoral or other farming operations and has issued to him a notice of registration in which authorization is granted whereby the goods concerned may be supplied to him at the rate of zero per cent…”

As the riding schools VAT103 doesn’t have the authorisation the condition is not met and the supply is to be charged at the standard rate (14%).  

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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