I raised this issue in the Dáil yesterday. On Monday morning, 400 farmers in County Kerry received a letter from the Revenue Commissioners requesting a payment for under-declaration of income based on patronage shares they had received from Kerry Co-op. To say this was a shock to the system is an understatement. We have spent the past six months in this Chamber fighting the cause of the agriculture sector. We have had extremely bad weather and poor milk, grain and beef prices. To receive a letter of this nature, unannounced and without warning, was to say the least a shock to the system for every farmer who received it.
My understanding of the tax code as it pertains to shares is that a share is only a piece of paper until such time as the shareholder cashes it in and realises its value, at which point capital gains tax or other taxes due are paid. I am not sure from where Revenue is coming on this issue because it has been long-standing practice to issue patronage shares. During the years many farmers have declared patronage shares in the accounts they or their accountants have submitted to Revenue and no issues have arisen. On Monday morning, however, an issue suddenly arose with them.
Yesterday I spoke to a farmer who had received one of these letters, despite being given a clean bill of health following a full Revenue audit. There is something systemically wrong when someone in the Revenue Commissioners can issue letters requesting the payment of outstanding tax on the basis that he or she has determined there has been an under-declaration of income. The nature and tone of the letter are even more worrying. I will read an excerpt:
This intervention is being conducted as an Aspect Query. This affords you the opportunity of making an Unprompted Voluntary Disclosure under the Code of Practice for Revenue Audit and other Compliance Interventions thereby minimising potential penalties together with avoiding publication and prosecution if all conditions attaching to making such a disclosure are met.
In other words, if the farmer does not pay up, Revenue will perform an audit, impose tax and penalties and put his or her name in the newspaper. This is, to say the least, heavy-handed. To add insult to injury, the letter states Revenue looks forward to hearing from the farmer in question within 21 days. Farmers are hard pressed to find money and most have been forced to sell animals to pay their income tax bills for the year. They now face bills of between €25,000 and €50,000 and have only three weeks in which to pay. Where is the fairness and justice in that? It is beyond comprehension that something like this can happen, particularly in farming which is under great pressure.
This is only the start of the process because the issue affects all co-operatives, including Glanbia and Dairygold, and may even extend to shares issued outside agriculture. The matter must be tackled. I ask that the chairman of the Revenue Commissioners appear before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach to explain the position.