Farmers who are registered for VAT are accountable persons for VAT in respect of all their taxable activities, whether those activities consist solely of farming or both farming and other activities such as the generation of electricity for provision to the national grid. As accountable persons for VAT, they would be entitled to claim input credit for VAT charged on the installation of an alternative energy generator, such as a wind turbine, for use in their taxable activities.
In so far as farmers who are not registered for VAT are concerned, they are not in the normal course entitled to credit for, or repayment of, VAT incurred by them on their business inputs. The Value-Added Tax (Refund of Tax) (No 25) Order, 1993 provides for refunds to unregistered farmers for tax borne on the “construction, extension, alteration or reconstruction of any building or structure which is designed for use solely or mainly for the purposes of a farming business”. However, while the installation of an alternative energy generator may be the construction of a structure, such a structure is not “designed for use solely or mainly for the purposes of a farming business”. It is designed rather to generate electricity for wherever required. Consequently, the installation of alternative energy generators does not come within the scope of the VAT refund order.