Kerry Co-op board to meet to discuss implications of tax demands on shares
The Kerry Co-op board will meet tomorrow, Friday November 25, to discuss the implication of the Revenue’s demand for back tax to be paid on patronage shares issued to Kerry Group suppliers during the period 2011 to 2013.
The event will be chaired by acting Chairman John O’Leary.
Meanwhile, IFA President Joe Healy has contacted the Revenue Commissioners on the issue.
He said the information contained within the letters issued to the Kerry suppliers, and the demand for a voluntary disclosure within 21 days, has caused considerable concern and anxiety among the farmers concerned.
“Providing farmers with 21 days’ notice as the first means of communication on the issue is simply not acceptable. The timeframe for farmers to get clarity on the issue, and to engage with Revenue, is too short and must be extended.”
In addition, greater clarity is required on the value that Revenue has ascribed to these patronage shares, and the resulting income tax liability that has been arrived at. Farmers purchased the shares at a value of €1.25/share.
“It was the clear understanding of farmers that this was the value of the shares and that any tax liability would arise at a future point, when these shares were disposed of.
“For many years, farmers have paid Capital Gains Tax on the full gain in value of their shares, i.e. the difference between the €1.25 purchase price and the price at which they were disposed.”
Joe Healy said it is only fair to farmers that they should be given more time, without penalty, to respond to the Revenue communication than is currently set out.
Meanwhile, an ICMSA spokesperson said that the nature of the letter issued to the farmers involved is more an invitation for taxpayers to engage rather than a heavy handed dictate.
“However the seriousness of the communication should not be underestimated as failure to adequately respond within the relevant time period afforded by the letters will undoubtedly result in a progression to the next phase of the tax collection project.
“For tax payers who had sold their shares and unwittingly or mistakenly paid capital gains tax on the full proceeds of their shares, there may be some consolation from the ability to transfer capital gains tax payments made against the underlying income tax, PRSI and USC due.”
It certainly seems like a cleverly targeted project from Revenue’s perspective given that the majority of milk suppliers will have funds accessible to them from the disposal of shares.
“Perhaps, more worryingly, farmers are wondering will the project be rolled out further to cover bonus shares often issued by Co-op’s as a result of trading activities.
“It is hoped farm organisations will liaise with Revenue with a view to ensuring farmers are dealt with fairly, have sufficient time to deal with the query and are afforded the opportunity to make payment by instalments where genuine hardship applies.
“As always professional advice should be obtained relevant to each individual’s circumstance.”
ICMSA will await the outcome of tomorrow’s Kerry Co-op board meeting before making further comment.
However, commentators in the Limerick/Kerry area are pouring cold water on suggestions that Finance Minister Michael Noonan should become personally involved in the matter and, by so doing, push for some sort of political settlement.