Farron calls for fair play for Farm diversifications under the VAT spotlight

12.00.00am BST (GMT +0100) Tue 7th Jul 2009

South Lakes MP Tim Farron has met with Treasury Minister Stephen Timms to press the case of local farm businesses who have been targeted by a government VAT recovery programme.

The investigation programme run by the treasury has found hundreds of rural businesses that are not paying VAT due to having an annual turnover of less than the minimum £68,000 threshold, but that are sharing space with another business.

Typically, a farm may have diversified and opened a bed and breakfast and registered the two businesses separately which are both below the VAT threshold. However, if the two businesses were joined together, they may exceed the threshold.

Many of the farm diversifications now under the spotlight came about as a result of Defra advice and support and so it is essential that while the treasury seek to ensure that people are complying with tax rules, they are sensitive to the fact that breaches in this area are likely to be innocent. Tim is asking for an amnesty for such businesses while they receive appropriate advice.

Commenting Mr Farron said:

"It's unacceptable that farmers who have followed the government's advice to diversify are now being hammered by the treasury's retrospective demands for VAT payments.

"At a time when so many hill farmers are struggling to get by, the government should be rewarding farmers wanting to diversify. Instead hundreds of unsuspecting farmers now face the prospect of being hit with huge VAT bills.

"The treasury should consider the devastating effect these charges will have on local farm businesses and should introduce an amnesty for such businesses until they can receive appropriate advice."