Farm Business

VAT Refunds for Essential Works Must be Restored to Farmers

IFA Farm Business Chair Rose Mary McDonagh said the Minister for Finance must move immediately and restore VAT refunds to unregistered farmers.

IFA has been in constant contact with the Government on the issue of a sudden, unannounced, change of interpretation of existing legislation by Revenue in relation to refunds of VAT to unregistered farmers. This change has resulted in a number of items of capital expenditure being ruled out.

Farmers have been making capital expenditure to increase their farm efficiency and sustainability, with the expectation of receiving a VAT refund. After making these investments, they now find out they will no longer qualify. Many of these farmers would have availed of bridging finance for the VAT cost and now find themselves trying to figure out how to repay these short-term finance arrangements. IFA is raising this issue with banks and other lending institutions.

At a Tax Administration Liaison Committee meeting last week, Revenue outlined that in addition to fencing, drainage, land reclamation and qualifying equipment used in micro-generation of electricity, only expenditure on the construction, extension, alteration or reconstruction of a building or structure used solely in the farming business will receive a refund. In the Dáil, Minister Michael McGrath referred to the legislation in relation to refusals for refunds on items such as meal bins, milk bulk tanks, automatic calf feeders, milking parlour equipment and automatic scrapers.

Rose Mary McDonagh said, “With the change in VAT treatment of many items of capital expenditure, the current TAMS ceiling is grossly understated. These were set as VAT exclusive amounts, but if VAT is no longer repayable on these, then the investment ceilings need to be raised immediately. These new increased ceilings must also apply retrospectively for farmers who are now been refused VAT refunds on items previously applied for under TAMS.” IFA wrote to Minister McConologue on this issue in October and we are expecting the required changes to be made.

“It appears from the changed position Revenue have now taken on the applicable Statutory Instrument, the only logical course of action is to immediately amend this piece of legislation, to ensure all items that were previously refunded are once again included. We have requested a meeting with the Minister for Finance and Agriculture on this matter,” she concluded.

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