Dáil Éireann Debate, Wednesday - 17 January 2024
371. Deputy Paul Kehoe asked the Minister for Finance how many farmers were refused VAT exemptions for purchase of fixed equipment between 1 November and 31 December 2023; and if he will make a statement on the matter. [1879/24]
Amharc ar fhreagraPersons who engage solely in agricultural production activities are not obliged to register for Value-Added Tax (VAT) and can participate in the Flat-Rate Farmer's Scheme. This scheme is a simplification arrangement permitted under the EU VAT Directive, designed to reduce the administrative burden for farmers by allowing unregistered farmers to be compensated on an overall basis for VAT on inputs, while remaining outside the VAT system, thereby avoiding the burdens associated with registration and filing.
Unlike VAT registered businesses, unregistered farmers are not entitled to a deduction for VAT incurred on individual inputs used in their farming business. Instead, the flat-rate scheme permits them to charge and retain the flat-rate addition in order to compensate them, on an overall basis, for the VAT across all their inputs.
There are certain limited situations in which flat-rate farmers are specifically permitted to claim a refund of the VAT incurred by them on particular inputs. These are outlined in S.I No. 201/2012 - The Value-Added Tax (Refund of Tax) (Flat-rate Farmers) Order 2012, which allows for refunds to be claimed on outlay incurred only on:
• the construction, extension, alteration or reconstruction of farm buildings or structures,
• the fencing, draining and reclamation of farmland, and
• the construction and/or installation of qualifying equipment for the purpose of micro-generation of electricity for use in a farm business.
• Outlay incurred for other purposes, such as the acquisition of fixed equipment, is not permitted under the Order. However, where the installation of fixed equipment requires the construction, reconstruction, or alteration of a farm building, the corresponding VAT incurred has been allowed in certain circumstances. Each repayment claim is assessed on its own merits. Claims that do not meet the conditions of the refund Order cannot qualify for a refund of the VAT.
• I am advised by Revenue that the scheme operates on a self-assessment basis, with claims submitted via Revenue’s Online Service (ROS) E-Repayments or MyAccount. Where a claim is subject to review, Revenue may return the claim to the claimant for further information.
• Claims can be fully approved, fully rejected, or partially approved where individual invoices within a claim may be refused.
• The following table gives the number of claims rejected in November and December 2023.
|
Month |
No. of claims rejected |
|
Nov-23 |
235 |
|
Dec-23 |
114 |
|
Total |
349 |
A claim may be fully rejected for numerous reasons including, but not limited to, the following: outside of 4-year VAT claim period, invoices submitted relate to items which do not qualify under the order, claimant has another trade and is above the threshold for VAT registration and incorrect supplier tax number provided.
In addition, a portion of a claim may be rejected at invoice level within the claim. Invoices may be rejected for numerous reasons including, but not limited to, the following: invoice details are lacking mandatory information, some items on the invoice are not payable under the order or invoices are being claimed in the incorrect period. In certain circumstances where an invoice has been rejected, the claim may be resubmitted with corrected claim details. Alternatively, the claimant may resubmit the invoice with an adjusted VAT amount removing non-allowable items.
Refusals of non-allowable items within a claim or invoice happen at line level and are not identifiable within Revenue’s systems and therefore statistics relating to specific items cannot be provided.
Revenue is obliged to administer this scheme in line with the relevant Order, providing flexibility where possible within the confines of the legislation. Any claimant aggrieved by a decision in relation to their claim may appeal directly to the Tax Appeals Commission (TAC) within 30 days of issue of that decision.
