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Agricultural co-operatives are commonly formed to improve agricultural production and marketing. »Ê¹ÚÌåÓýappy are normally incorporated under the Industrial and Provident Societies Act 1965. »Ê¹ÚÌåÓýappy are normally, therefore, companies with limited liability.

An example of a co-operative is where a number of VAT-registered farming businesses join together to form a society. »Ê¹ÚÌåÓýappy use their combined financial resources, which come from the purchase of a number of shares by each member, to carry out certain trading activities. »Ê¹ÚÌåÓýappse activities may include making taxable supplies of storage, grading of produce, or consultancy.

Where there is:

• a genuine agricultural co-operative operating as a business rather than a club or association;
• the payments to the co-operative are for the benefit of a share in the ownership of the co-operative; and
• the payments to the co-operative are not part consideration for the benefit of enjoying any facilities

such payments are outside the scope of VAT.