Check for VAT on wool sales

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 merchant’s 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."