Tuesday, 17 September 2019

Ceisteanna (125)

Charlie McConalogue


125. Deputy Charlie McConalogue asked the Minister for Finance his views on correspondence regarding a scheme from a person (details supplied). [37199/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by Revenue that business models and contractual arrangements in the poultry sector created the conditions for the generation of a systematic excess of flat-rate addition payments to farmers in the sector over their VAT input costs. My predecessor introduced a provision in Finance Act 2016 to enable the exclusion of an agricultural sector from the flat-rate scheme where the Minister is satisfied that, because of the business structures, contractual arrangements or models in place, the application of the flat-rate addition within that sector has resulted in, and would otherwise continue to result in, a systematic excess of flat-rate addition payments over input costs incurred by flat-rate farmers in that sector.

My officials are currently in the process of considering a report received from Revenue on the operation of the flat-rate addition scheme in the poultry sector.

To date, Revenue has not established that similar business models and contractual arrangements exist or are common in any other agricultural sector and the correspondence referred to does not present any evidence of such arrangements.  A flat-rate farmer involved in a business in which cattle are bought from other flat-rate farmers and reared for a further limited period before being supplied to a VAT registered business such as a beef processor would normally receive a flat-rate addition payment  that exceeded his or her VAT input cost; however, the payment might not exceed the total VAT input costs associated with rearing the animal incurred by all the farmers involved in the process. It would be expected that the price paid to flat-rate farmers supplying to another flat-rate farmer would take account of the flat-rate ‘credit’ being transferred with the animal. I will however continue to monitor the beef sector and other agricultural sectors to ensure that the flat-rate addition scheme does not operate to give rise to overcompensation of farmers at the aggregate level for VAT on input costs.

If the Deputy has information of particular contractual arrangements in the beef sector that could give rise to a systematic excess of flat-rate addition payments to farmers involved in beef production he should pass that information on to the Revenue Commissioners.