I am useless, as the Minister knows. My better half is much more interested in that area and is quite good at it.
Some of these people had very small operations 15 years ago and there was no profit in it. One would have thought they would never make a living but over the years it has grown. Everybody is buying shrubs and it is a growth industry which has been a great success. Many people in my constituency are involved in the business and employ considerable numbers. It has worked very well.
In the preparation of accounts for those people, some accountants decided in the initial years not to value the stock at all on the basis that it was growing stock. These are stocks which start off as little shrubs or small trees and they are not sold until three to five years down the road. They were valued at nil. Other accountants decided to put some value on them and let them at that value for the whole period. There was an occasional case — I know of one in particular — where the full valuation was applied. Each year the client went out and valued the stock.
Since Revenue audits commenced, some of these people have been investigated in the normal course of the system. Some inspectors of taxes have decided that the full ordinary valuation stock rules must apply to these cases. It only concerns a time difference, because when the stock is eventually sold in the next five or six years the Revenue Commissioners will get their money. However, if the Revenue Commissioners insist on this valuation it will put some people out of business. They will have to pay a large sum of tax in one go and will not be able to do it.
There is another good reason for not putting any value on growing stocks. Stocks could be growing in the field and looking well today but in six months' time they could be gone. It makes no difference because if they come to fruition and money is made, it shows up in the accounts and the Revenue Commissioners get their money. It is only a time difference, but it has caused considerable angst among nursery stock growers.
At present some people have their stock at nil value, others have been allocated some value and the remainder have their stock at market value. Every self-employed person will be audited in the next couple of years. Some inspectors of taxes have applied the growing stock valuation rules and others have left matters as they stand. It is a simple problem to resolve. As a result of meetings between the IFA and the Revenue Commissioners, some ameliorating provisions or practices were to be put into effect but they would not go far enough.
One simple way I have devised is a once off measure of valuing downwards. Rather than valuing everything up, we could say that the growing stocks do not have to be valued. People can reduce the stock back to nil. I am sure one could include a provision whereby tax would not have to paid back and then everyone would be on the same basis.
This issue is causing anxiety. It has been a successful industry over the past ten years. Speaking professionally, if this is to be interpreted in this fashion it will put people out of business. It is not a tax avoidance because the tax will be paid in due course. It is a question of whether the Revenue Commissioners want all the tax today and put people out of business, or over the lifetime where they will get it in any event.
