Should the Revenue Commissioners be told: ‘see you in court!’
The third line of the letter sent by the Revenue to 400 Kerry suppliers earlier this week makes for interesting reading.
My interpretation of the phrase: ‘It is Revenue’s position..” would indicate that a degree of doubt must exist regarding the conclusion arrived at by the Government’s tax gurus to the effect that the receipt of patronage shares in Kerry Co-op represents a form of income generation.
And if doubt does exist then the only place to have the issue resolved is in the courts.
So, have the Revenue Commissioners taken a punt with the Kerry farmers, just to see what fruit they can shake out of the tree? I am not sure, but the implications for Ireland’s farming industry could be immense if the Kerry debacle is not clarified – and quickly.
As most farmers already know, Kerry is not the only co-op to issue shares as part of a membership-focused: ‘thank you for your support’ drive. For example, back in March 2015 the board of Glanbia Co-op proposed the roll-out of 10m Glanbia plc shares, valued at approximately €170m, to all members of the Society.
One wonders what Revenue’s view on this transaction might be, should they start sniffing around it.
The initial response of the farmers now facing significant tax demands can be summarised in the following question: why should we have to pay tax on assets that have no actual value until such times as we redeem them?
And they have a point. IFA President Joe Healy has already pointed out that farmers have always paid Capital Gains Tax on the full increase in value of their shares.
This liability is calculated on the difference between the initial purchase price and the value they realise when disposed of. So why can’t Revenue allow this approach to be taken, where the Kerry patronage shares are concerned?
Adding salt to sore wounds is the fact that the demand from the Revenue comes at a time when milk producers are trying to get their businesses stabilised after 18 months of farmgate prices that were well below the cost of production they had incurred.
Assuming that each of the 400 Kerry suppliers in receipt of letters is now facing an average tax demand of €15,000, this brings the potential trawl of money which Revenue could hope to collect to €6m – not an insubstantial sum.
And, in my opinion, it’s big enough for both the IFA and the ICMSA to be telling the Revenue Commissioner: ‘see you in court!’