Farming organisations are urging the Department of Finance to provide clarity on VAT refunds for unregistered farmers. There has been confusion surrounding whether these farmers can avail of VAT refunds, leading to concerns over the financial burden faced by some farmers and manufacturers. The Irish Farmers Association (IFA) claims that farmers who have made capital expenditure investments to enhance farm efficiency and sustainability are now finding out that they no longer qualify for VAT refunds. The IFA has brought this issue to the attention of banks and lending institutions. Revenue, however, has stated that it has not changed its approach to the refund order and that each claim is assessed on its own merits.
According to Revenue, unregistered farmers may still be eligible for a VAT refund on certain expenses allowed under the VAT refund order. These expenses include those incurred in the construction, extension, alteration, or reconstruction of farm buildings or structures, such as fencing, draining and reclamation of farmland, and the construction or installation of qualifying equipment for microgeneration of electricity for use in a farm business. However, Revenue has clarified that the refund order does not cover VAT on movable goods like farm machinery.
The confusion arises from Revenue’s interpretation of the legislation. Although the legislation does not explicitly mention fixed items, there was an understanding among farmers that once an item was fixed, they would receive a VAT refund. In recent months, Revenue has taken a more literal interpretation of the legislation, causing uncertainty among farmers. For example, farmers have been informed that if they can remove and sell an item, they will not be eligible for a VAT refund. This poses a problem for farmers who may need to sell items like milking parlours in the future. While there haven’t been any reported cases of farmers being unable to receive VAT back on milking parlours, issues have arisen with reclaiming VAT on milking equipment, such as bulk tanks.
Farmers who have made significant purchases without realizing that they would be unable to receive VAT refunds have reached out to the IFA for assistance. The IFA is now working with the Department of Finance to explore the possibility of changing the legislation. Additionally, discussions are underway with the Department of Agriculture, Food, and the Marine (DAFM) regarding underfunding in the Targeted Agricultural Modernization Scheme (TAMS). The IFA has requested a meeting with the Minister for Agriculture, Food, and the Marine to address these concerns.
The Irish Creamery Milk Suppliers Association (ICMSA) is also engaging with Revenue to discuss potential changes to the legislation. The ICMSA aims to find a resolution that provides clarity to farmers and manufacturers and encourages continued investment in the agricultural sector.
In conclusion, the issue of VAT refunds for unregistered farmers has caused confusion and concern within the farming community. The IFA and ICMSA are actively seeking clarity from the relevant authorities and exploring the possibility of revising the legislation to ensure that farmers receive the VAT refunds they expected.
