I am advised by Revenue that the 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. This business model did not breach Irish VAT law at the time and did not constitute fraud or tax evasion. 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.
Following the introduction of Section 86A of the VAT Consolidation Act 2010, Revenue undertook a detailed examination on the operation of the flat-rate addition scheme in the poultry sector and submitted a report to my Department which is currently under consideration.
To date, Revenue has not established that similar business models and contractual arrangements exist or are common in any other agricultural sector. 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, it should be passed on to Revenue.