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VAT recovery for farmers and landowners

For general discussion of input tax and VAT recovery, see Division V3.4. This section deals with some specific recovery issues likely to cause difficulties for farmers and/or landowners.

VAT recovery on farmhouses

Whilst VAT incurred on works to an individual's home is generally irrecoverable, HMRC has recognised that farmhouses are a special case.

HMRC's manual VIT41800 indicates that its policy is that a business should treat 70% of VAT incurred as input tax where all of the following conditions are met:

1. Ìý

   •ÌýÌýÌýÌý the building is a typical working farmhouse

2. Ìý

   •ÌýÌýÌýÌý the business is a full time farming activity

3. Ìý

   •ÌýÌýÌýÌý the work done is in the nature of repair and maintenance of the farmhouse

However, in all other cases HMRC indicates that it will consider the specifics (although it is unlikely that it will allow more than 40% to be treated as input tax). Such situations include:

1. Ìý

   •ÌýÌýÌýÌý where farming is only a part-time activity and