Only farmers who are registered for VAT are currently entitled to claim VAT back on the purchase of slurry storage bags, according to the Minister of State for Heritage and Electoral Reform, Malcolm Noonan.
But Fianna Fáil TD Jackie Cahill believes this is “utter nonsense” and that all farmers should be able to claim the VAT rebate on slurry bags.
“I have had a lot of correspondence with Revenue in the past couple of months to try to get this position clarified,” the Tipperary TD said.
“Revenue says that it deems the slurry bags to be moveable infrastructure. With respect, that is utter nonsense. Anyone who would see a slurry bag that is put into operation would know that it is not possible to move it.”
Deputy Cahill said he was particularly frustrated by this approach because of the government’s ongoing strategy to encourage farmers to engage in climate and biodiversity actions.
“In an era where we are trying to increase slurry capacity on farms, to put this extra cost on farmers is not acceptable. In most cases slurry bags are put on small farms.
“It’s a very efficient, cost-effective way of increasing slurry capacity,” he added.
The Tipperary TD said he is “completely unsatisfied” with the answers he has received to date from Revenue.
“I want the Department of Finance to direct Revenue to reclassify slurry storage bags so they would be VAT reclaimable for unregistered farmers. It’s only common sense.
“This is an issue that needs to be addressed urgently,” he said.
Deputy Cahill said that currently, Revenue advises farmers that “slurry storage bags do not come within the scope of the refund order”.
The Tipperary TD believes this position needs to change.
“The Minister for Finance Michael McGrath has to go to Revenue and direct it to re-examine this classification. How can anyone with common sense say slurry storage should not come under the refund order?
“I have contacted Revenue on a number of occasions and received this same cock-and-bull story of an answer.
“It is either laziness or incompetence on the part of Revenue not to recognise that this is an efficient, cost-effective way of storing slurry for a lot of small- and medium-sized farmers, and for it not to be VAT rebatable is unacceptable,” he added.
But Minister Noonan told Deputy Cahill that in accordance with the EU VAT directive, farmers can “elect” to register for VAT.
“The VAT treatment of goods and services is subject to EU VAT law, with which Irish VAT law must comply.
“In accordance with the EU VAT directive, farmers can elect whether to register for VAT in respect of their farming business. Farmers who register for VAT have an entitlement to reclaim VAT on costs incurred in respect of the agricultural business,” Minister Noonan said.