Dáil Éireann Debate, Tuesday - 21 May 2024
100. Deputy Jackie Cahill asked the Minister for Finance his response to concerns from farmers who were refused refunds on VAT items that previously qualified; and if he will make a statement on the matter. [22701/24]
Amharc ar fhreagra106. Deputy Jackie Cahill asked the Minister for Finance the reason calf feeders were VAT refundable without any question up to August 2023 and are now being refused; and if he will make a statement on the matter. [22702/24]
Amharc ar fhreagraI propose to take Questions Nos. 100 and 106 together.
The flat-rate farmers refund order has been raised on a number of occasion particularly over how VAT refund claims are being administered and processed by the Revenue Commissioners. As the Deputy is aware, the legislation only provides for VAT refunds to unregistered farmers for the following expenditure:
the construction, extension, alteration or reconstruction of farm buildings or structures;
the fencing, draining or reclamation of farmland; and
the construction, erection or installation of qualifying equipment for the micro-generation of electricity for use in the farm business.
The refund order was originally introduced in 1972 and has seen minor amendments to the type of expenditure covered. In 1993, the order was updated to provide for claims for fencing and in 2012 the order was amended to clarify that certain equipment used for the microgeneration of electricity was covered. The refund order does not provide for any other farming equipment or machinery.
I am advised by Revenue that they can only administer the refund order according to the legislation as enacted. The agricultural sector, particularly the Dairy Sector, has evolved significantly since 1972. Since 1972, new products have come onto the market that differ from previous versions and while the function of the products may be identical, there are important differences from a VAT perspective. Revenue will continue to monitor refund claims for new and innovative products as they are received but can only refund expenditure that is within the scope of the legislation.
Given the significant volume of claims processed annually (37,368 in 2023), Revenue only selects claims for manual review on the basis of risk. Where a claim is identified for manual review and is deemed ineligible such claims are refused and Revenue ensures that any similar ineligible claims are also identified and refused. Claimants may appeal decisions to refuse claims within 30 days after the date of the refusal letter by completing and submitting a ‘Notice of Appeal’ form to the Tax Appeals Commission (TAC). Ineligible claims can be refunded in error; however, this does not create a precedent for other similar claims to be paid.
Revenue is engaging with the farming sector and have met with the ICMSA and IFA on several occasions, most recently with the ICMSA on 22 April and the IFA on 9 May. Revenue officials also attended the Joint Oireachtas Committee on Agriculture, Food and Marine on 8 May. Revenue is currently reviewing submissions from the representative groups. Revenue advise that it is anticipated that an updated guidance document will issue this month once all outstanding information has been received by Revenue.
Finally, the Deputy may wish to note, that it is always open to a farmer to elect to register for VAT in respect of their farming business and claim a full deduction for the VAT they incur on their business costs, subject to rules on deducibility.
