I propose to take Questions Nos. 160 to 162, inclusive, together.
I am informed by the Revenue Commissioners that responsibility for the VAT (value added tax) pages of their website rests with Revenue's Indirect Taxes Division, which is responsible for VAT legislation, interpretation and information. Updates and changes to these pages are made exclusively by Indirect Taxes Division.
The Taxes and Duties section of the Revenue website contains a range of information regarding VAT. The VAT rates database, which contains details of an extensive listing of products and services, links to the applicable rate of VAT and other related information. The VAT treatment indicated is based on current practice and is not to be regarded as a statement of law or as a substitute for consulting the legislation.
The entire database is updated on a regular basis with rates on new goods or services or amendments to previously published rates based on changes in legislation, appeal decisions or the nature of the goods and services. When the database is updated, the rate shown for each good and service, whether it has been changed or not, is given the same update date. At present rates show an update date of 23 July 2013.
The 'cowmats' entry has been on the website database since the 1990s. The original entry read "Cowmats - Supply and Install Rate 21%", which was the standard rate of VAT at the time. In conjunction with the introduction of the Value-Added Tax Consolidation Act 2010 the database was upgraded to include an enhanced remarks field. Since 2010, the entry on the database makes reference to the two-thirds rule that may apply to cowmats in very exceptional circumstances. The entry on the database since the introduction of the VAT Consolidation Act 2010 reads “Cowmats – Supply and Fit Rate Standard Value-Added Tax Consolidation Act 2010 Ref: Section 46(1)(a) Remarks; However, some cowmats may be regarded as fixtures e.g. mats set in wet concrete or stuck down over their entire surface qualify as fixtures, subject to the 2/3 rule.”
Section 41 of the VAT Consolidation Act 2010 specifies that where the value of movable goods provided under an agreement for the supply of services exceeds two-thirds of the total consideration under the agreement for the provision of those goods and the supply of the services the consideration shall be deemed to be referable solely to the supply of the goods and tax shall be charged at the VAT rate appropriate for the goods. This is known as the two-thirds rule. The two-thirds rule applies to construction services for agricultural buildings and non-residential immovable goods. The two-thirds rule has been a feature of VAT since its introduction and is applied in all relevant cases.
Revenue select cases for intervention using a risk-based approach that considers the presence of various risk indicators and other information available, with the aid of their computerised risk analysis system, REAP. The type of intervention to be undertaken is, in any particular case, the one considered to be the most appropriate to target the specific risk identified. In many cases this may lead to a single tax head, multi tax head or single-issue audit rather than a comprehensive audit.
Section 46 of the VAT Consolidation Act 2010 provides that tax shall be charged in relation to the supply of goods or services at the rates set out in that section. Where an intervention results in the conclusion that a supplier has charged the incorrect rate of VAT, Revenue may recover the underpaid VAT by raising assessments under section 111 of the VAT Consolidation Act 2010. The recipient of a VAT invoice has an entitlement to an input credit only for the VAT shown on the invoice where the goods or services are used by him or her for the purpose of VAT-able supplies. The issuer of an invoice which shows VAT at a lower rate than the correct rate for the transaction may seek to justify their failure to correctly operate the VAT system by claiming that a loss of revenue does not arise where the recipient of the invoice, such as a VAT registered farmer, had full recoverability for the VAT.
Revenue has a clear responsibility to ensure the correct operation of the tax system, and the onus of proof that 'no loss of revenue' arises rests clearly with the taxpayer and the taxpayer and/or the tax adviser in any case must engage directly with their Revenue district to establish this. The procedures in relation to 'no loss of revenue' are clearly set out in Revenue's Code of Practice.