The law states that seeds or other means of propagation of plants providing food for human consumption is zero-rated for VAT, so no VAT is charged.

HMRC in its VAT manual states that theoretically this interpretation is not strictly correct in law as it would only cover those plants which are themselves harvested and eaten and not those which simply produce yearly crops. For example, it would cover vegetable plants such as turnips or sugar beet but not apple trees or raspberry canes. However, since the intention of the law is to keep VAT out of the food chain as far as possible, HMRC have always interpreted the zero-rate as including plants yielding or producing food for human consumption as well as plants that are food in their own right. This enables relief to apply to the full range of food-bearing plants.

However, HMRC do not accept food as including all edible products, so they do not allow relief to all edible plants, but restrict it to those whose primary purpose is to provide food.

In the 1970s, a list was collated in collaboration with growers which contained 36 fruit, berry and nut plants that HMRC accepted as receiving the relief. Almond trees, citrus trees and tayberry shrubs have since been added to the zero-rated list. The list, however, has not been reviewed or updated for at least 25 years and both horticulture and foods tastes have moved on considerably in that period of time.

Businesses supplying varieties of berry plants to satisfy the growing demand for health food like aronia and goji berries are expected to charge VAT at the standard rate because these varieties of fruit-bearing plants are not on HMRC’s list to allow zero-rating. Similarly, the jostaberry (gooseberry/blackberry cross) is a widely reported addition to the English grower’s repertoire. Both of the hybrid’s parents are on the list, but its novel offspring is not a berry plant that can be zero-rated.

The NFU and HTA have gathered evidence of 15 food-producing plants grown commercially in the UK that they and commercial growers say should be on the list. It seems that HMRC are open to accepting new fruit that can be included on the zero-rated list, but it is for the taxpayer to provide evidence to HMRC that the fruit is being grown for fruit production and not just ornamental effect.

In summary, if the fruit bearing shrub or plant is not on the list then HMRC will expect VAT to be charged at the standard rate and it cannot be treated as zero-rated. The current list can be found in VAT Notice 701/38, section 3.5.

Breaking news – it appears that a decision on the extension of the list has now been made by HMRC but is awaiting publication.

Keith Phillips
Director, Duntop & Toplis

^{The views expressed are the author’s and not ICAEW’s.}