It's that time again-best place to buy grains for delivery?

[Rodcx500z]

found some here Spitting Feathers – Crushed Crisp Pale Malt. 25kg | Spitting Feathers i am going to pick one up on Friday' postage is £8-00 if anyone is interested

 

[The Baron]

Well placed order this aft and will be delivered between 8.30 am and 12.30pm tomorrow.
If that happens on time excellent and delivery free

 

[Northern_Brewer]

I have spoken to Fawcetts and they are still ok to sell a minimum of 10 bags, they also said that they did not charge vat but I am not sure on that as it is for homebrewers so maybe somebody with a little insight maybe able to clarify that.

Those kinds of grey areas get complicated, so HMRC use rules of thumb which mostly revolve around packaging rather than having to judge whether someone is homebrewing or not. So their rule of thumb for malt is that 25kg is considered "commercial" packaging and so doesn't attract VAT regardless of who buys it, whereas anything smaller is considered retail packaging and so is VATed.

But for instance you could buy 20g of coriander from Tesco and they'd assume that you're buying it to put in curry so would not charge VAT, but 20g of coriander from a homebrew supplier would be assumed to be for homebrew and so would be VATed, and a commercial brewery buying 1kg of coriander for a witbier would not pay VAT.

 

[MashBag]

That's not how I understood vat in the uk. I am vat registered.

I thought vat was product category based. Basic Food (grain) being 0% rated? Nothing to do WHO buys it?

Cold Sausage roll = food = 0%
Hot sausage roll = snack = 20%

Everything has vat, but the rates vary.
Food is 0% = (no vat)
Energy is 5%
Non essential items 20% (at the moment)

 

[Sadfield]

Standard rating applies to:

• kits for home brewing, wine making etc;
• retail packs of hopped malt extract, malted barley, roasted barley, hops, special wine and brewer’s yeasts, wine or beer concentrates and similar products specialised to home-brewing or wine making; and
• retail packs of foods which are not specialised to home-brewing or wine-making, such as fresh, dried or tinned fruit and fruit juices, barley, glucose and plain malt extract, if they are held out for sale (ie packaged and labelled) for home brewing or wine making.

https://www.gov.uk/hmrc-internal-manuals/vat-food/vfood9000

 

[Sadfield]

IIRC the now dispanded group purchase started offering split quantities of speciality grains (into retail packs). So, I suspect they stopped because their supplier wanted them to be VAT registered.

 

[The Baron]

IIRC the now dispanded group purchase started offering split quantities of speciality grains (into retail packs). So, I suspect they stopped because their supplier wanted them to be VAT registered.

Yes that makes sense, it all seemed to be kept quiet for some reason

 

[MashBag]

I did not realise there is an expection specifically for home brew.

All the more reason to buy in sacks.

I see that was 1977... just after the emergence of many home brew shops I would venture.

 

[Sadfield]

And avoid buy your unmalted grains and sugars from homebrew stores. You have to be wary of the unofficial Health Food Tax, though.

 

[MashBag]

And avoid buy your unmalted grains and sugars from homebrew stores. You have to be wary of the unofficial Health Food Tax, though.

Lol. You have to beware of health food too it is generally sh1te

 

[Clint]

VAT on pet food is another weird one..we've sold pet feed for years..bulk bags for "working" animals(eg.greyhounds) is VAT exempt,also for "food" animals such as rabbits and pigeons.

 

[Northern_Brewer]

That's not how I understood vat in the uk. I am vat registered.

I thought vat was product category based. Basic Food (grain) being 0% rated? Nothing to do WHO buys it?

Cold Sausage roll = food = 0%
Hot sausage roll = snack = 20%

Everything has vat, but the rates vary.
Food is 0% = (no vat)
Non essential items 20% (at the moment)

It's complicated, and things like the coriander example go to show how incoherent things can get when governments start trying to make exemptions to standard rules, but you need to draw lines even when it's a grey area.

The basic idea of VAT is that everything gets charged at the standard rate of 20% by default. This includes items used for hobbies such as fishing rods and golf balls.

But then government back tracks and says that food is special and so some kinds of food are zero-rated. And this is done with two tests.

First - is it an "ingredient" or a finished product? Ingredients, including processed ones (which would include malt), are zero-rated.

Second - if it's a finished product is it "basic" or a "non-essential". Going to a restaurant is considered non-essential (hence your sausage roll example, any hot food is treated as non-essential) as are things like chocolate biscuits, whereas sandwiches are considered basic and (weirdly) we have a fundamental human right to cake, which is also zero-rated. Hence the famous lawsuit where £millions of VAT depended on whether Jaffa Cakes are a cake or a chocolate biscuit - the judge ruled that they are a cake and so zero-rated.

Malt and coriander fall in a similar grey area - are they food ingredients (which would be zero-rated), or materials for a hobby (which would be standard-rated like fishing rods)? They can be used for food (malt loaves and curry), commercial brewing (who don't just pay VAT on their beer but lots of duty as well), and the hobby of homebrewing.

As you say, they can only discriminate on products, not on who buys it. Hence they have drawn a line which says that these products are zero-rated unless they are packaged in a way that targets homebrewers.

They have drawn the line for malt that 25kg sacks are "commercial" and anything smaller is for hobby purposes. It's not perfect, but it's near enough and importantly gives a clear line for the industry to work to.

 

[lancon]

It's complicated, and things like the coriander example go to show how incoherent things can get when governments start trying to make exemptions to standard rules, but you need to draw lines even when it's a grey area.

The basic idea of VAT is that everything gets charged at the standard rate of 20% by default. This includes items used for hobbies such as fishing rods and golf balls.

But then government back tracks and says that food is special and so some kinds of food are zero-rated. And this is done with two tests.

First - is it an "ingredient" or a finished product? Ingredients, including processed ones (which would include malt), are zero-rated.

Second - if it's a finished product is it "basic" or a "non-essential". Going to a restaurant is considered non-essential (hence your sausage roll example, any hot food is treated as non-essential) as are things like chocolate biscuits, whereas sandwiches are considered basic and (weirdly) we have a fundamental human right to cake, which is also zero-rated. Hence the famous lawsuit where £millions of VAT depended on whether Jaffa Cakes are a cake or a chocolate biscuit - the judge ruled that they are a cake and so zero-rated.

Malt and coriander fall in a similar grey area - are they food ingredients (which would be zero-rated), or materials for a hobby (which would be standard-rated like fishing rods)? They can be used for food (malt loaves and curry), commercial brewing (who don't just pay VAT on their beer but lots of duty as well), and the hobby of homebrewing.

As you say, they can only discriminate on products, not on who buys it. Hence they have drawn a line which says that these products are zero-rated unless they are packaged in a way that targets homebrewers.

They have drawn the line for malt that 25kg sacks are "commercial" and anything smaller is for hobby purposes. It's not perfect, but it's near enough and importantly gives a clear line for the industry to work to.

I think you'll find that 25kg sacks of malt if for home-brewing are liable to vat. If it hasn't been charged then that is a mistake of the supplier. To get no vat would require proof of commercial use. It's not the quantity but the use of that is the determining factor.

 

[Sadfield]

Home brewers are taxed as consumers, as being a producer would be liable to other taxes. In 1977 they wanted homebrew to be taxable. See link in post #25. HMRC use the following definition.

Retail

the sale of goods individually or in small quantities to consumers (Collins Concise Dictionary)

 

[Northern_Brewer]

I think you'll find that 25kg sacks of malt if for home-brewing are liable to vat. If it hasn't been charged then that is a mistake of the supplier. To get no vat would require proof of commercial use. It's not the quantity but the use of that is the determining factor.

No, it's how they are packaged that is the determining factor, per VFOOD9000 :
[standard rate VAT] "only applies to food or food ingredients prepared and packaged for home brewing and home wine making."

The concept of whether something is likely to be used for commercial brewing guides the decisions as to whether a particular package type is zero-rated or not, but the same packaging can't have different VAT rates applied to it.

VFOOD9000 was introduced because it was felt to be unfair that beer kits were made up of mostly zero-rated food ingredients, whereas wine kits were mostly made of standard-rated fruit juice/concentrates.

 

[Clarence]

This thread makes me all the more grateful to be able to pick up malt from the craftymaltsters for £27.50 for 25kg

There we are @the baron , invite Anna and family down for a weekend's unbridled supping of your homebrew and exchange of brewing stories. Provided she picks up a couple of bags from Crafty for you, of course. Problem solved.

 

[GhostDoggyWoofWoof]

Since you only have to charge VAT if tou are VAT registered (compulsory only if turnover exceeds £85k) I don't see any problem in buying in bulk VAT free and then splitting, as long as the consortium didn't breach the £85k limit. If it worked as a partnership so there was no sale to group members from the consortium even that issue wouldn't arise. ANd you most definitely don't have to be VAT registered to but things (although for years contract hire of cars was only available to VAT reg'd businesses, but that was driven by manufacturers not wanting to lose the huge margins they were charging on consumer sales)

 

[borischarlton]

I just want to clear up the VAT situation, especially for the 25kg sacks. They have to be sold including VAT to home brewers. In fact, it doesn't matter on the amount or how it's packaged. If it is for home brewing, it incurs VAT. The only time we can sell ingredients zero rated is to breweries who have an HMRC Brewery number.

 

[GhostDoggyWoofWoof]

That flies in the face of the clear guidance set out in VFOOD9000 which does say it is how it is packaged that matters "when they are in any way packaged or prepared for use home brewing and wine making"

 

[Sadfield]

Not really, stored and distributed would come under the description of prepared, even if not repackaged.