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An irrigation community has enquired whether transferring part of its water flow to another community in a different catchment area is exempt from VAT as a water management activity. The DGT has ruled that the transaction is subject to VAT and that the income is taxable under Corporation Tax as it constitutes returns from an economic activity.
Irrigation communities must account for VAT on water rights transfers and include the resulting income in their Corporation Tax filings, as these transactions are classified as economic activities rather than exempt water management tasks.
The tax team reviews your specific situation.
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