Ella Thom, 49, fraudulently claimed money through tax returns she was not entitled to over a period of six-and-half years.
HMRC officials uncovered the fraud after carrying out an investigation into the farmer's financial accounts.
Aberdeen Sheriff Court heard yesterday she had taken over the tenancy of the family farm and had got into financial difficulties after her mother's death in 1992.
Defence lawyer Lynn Bentley said her client owed a "great deal of money" and was living off her credit card and working part-time at a hotel. She told the court Thom had not financially benefited from the fraud.
Ms Bentley said: "She was asked by a certain person to effectively make claims in her name and reclaim VAT In respect of this."
The lawyer said her client had received help from her uncle before he died in 2000.
She told the court: "Since that time it appears that she may have had pressure exerted on her."
The court heard tax officials found no evidence her client had benefitted financially from the fraud when they visited her farm at Tornaveen in Royal Deeside.
The only assets she had were her cattle, estimated to be worth about £100,000, and some farm machinery.
Ms Bentley said her client had suffered anxiety at the prospect of going to prison because she feared that the farm would be repossessed.
Thom previously admitted claiming £657,932 in VAT repayments that she was not entitled to between September 7, 2004 and March 8, 2011.
Sheriff Graeme Buchanan noted that the fraudulent activity had been going on for a "substantial" period of time and had involved a "large sum" of public money.
He jailed Thom, of Little Drumlassie Farm, Tornaveen, for two years and three months.