Is the Crofting Commission seeking to prevent VAT registration of common grazings?



Brian Inkster

Crofters should be concerned by the revelation that someone, possibly the Crofting Commission, is potentially questioning their ability as shareholders in a common grazings to be VAT registered, according to crofting law expert Brian Inkster.

In a letter to shareholders in the Upper Coll Common Grazings on the Isle of Lewis the grazings constable, Colin Souter, the legality of whose appointment is in question, stated: “Following receipt of legal opinion from Queen’s Counsel, the position of Grazings Committees being able to register for VAT as trading entities in order to reclaim VAT has come under scrutiny. The dialogue with HMRC regarding VAT status remains ongoing and once concluded, I will be able to advise on the outcome.”

Following a suggestion that Mr Souter may have instructed the opinion he stated: “I should also point out that I have never sought legal advice from Queen’s Counsel in any context, since being appointed as Grazings Constable.”

So who instructed this legal opinion, who paid for it and why? How did Colin Souter come to be in possession of it and why? In his dialogue with HMRC is Colin Souter trying to stop VAT registration at Upper Coll Common Grazings and if so why?

Mr Inkster pointed the finger at the Crofting Commission.

He said: “It can only be assumed that the attempt to stop VAT registration of common grazings probably lies at the door of the Crofting Commission. Would this not be how a grazings ‘constable’ appointed by them would be in possession of such information?

“We are already aware that the convener of the Crofting Commission, Colin Kennedy, was of the view that common grazings should not receive SRDP funding. This very alarming notion (an issue that did not concern the crofting regulator and/or its convener in any way) was firmly quashed by Fergus Ewing MSP.

“It is therefore not a giant leap to think that the Crofting Commission and/or their convener might be behind this attempt to stop common grazings being VAT registered. If that should prove to be the case it is scandalous.”

He added: “Questions regarding whether crofters should be VAT registered or not have absolutely nothing to do with the Crofting Commission. It is a matter between crofters and HMRC.

“Public money should not have been spent on the opinion of Queen’s Counsel on such matters. If that has happened Audit Scotland should be investigating the issue.

“But more significantly why is the Crofting Commission and/or their Convener intent on depriving crofters of income? First it was SRDP funding. Now it appears to be VAT.”

Mr Inkster has pointed out that under and in terms of the Crofters (Scotland) Act 1993 the Crofting Commission has as one of its functions “promoting the interests of crofting”.

On their website the Crofting Commission state that it “regulates and promotes the interests of crofting in Scotland to secure the future of crofting.”

This statement links through to a general leaflet on crofting that states: “The Crofting Commission is working to secure the future of crofting by creating and promoting a well regulated crofting system that positively contributes to the sustainability of rural communities.”

Mr Inkster takes the view that by seeking to deprive crofters of SRDP funding and now, possibly, VAT the Crofting Commission cannot be said to be promoting the interests of crofting, securing the future of crofting or positively contributing to the sustainability of rural communities. Mr Inkster said it was in fact “quite the contrary”.

He went on to state: “If commissioners are acting in such a way, completely contrary to the functions that the Crofting Commission was established to carry out, then those commissioners responsible have no place in that organisation. They should be ashamed of themselves.

“They are clearly ‘unable or unfit to exercise the functions of a member’ or ‘unsuitable to continue as a member’. As such the Scottish ministers may remove them from office under and in terms of the Crofters (Scotland) Act 1993. There have been repeated calls over recent months for such action to be taken but if what could be called ‘Crofting VATgate’ does fall at the door of the convener and/or any other commissioners then this surely is the final straw that broke the camel’s back.

“Fergus Ewing MSP, as Cabinet Secretary for the Rural Economy and Connectivity with responsibility for Crofting, should immediately launch an investigation to get to the root of ‘Crofting VATgate’, publicise his findings for the benefit of crofters and take appropriate and decisive action against those responsible.”