Revenue has been invited to appear before the Oireachtas Committee on Agriculture, Food and the Marine to discuss the issue of VAT refunds for unregistered farmers.
Revenue has stated that there is no change in regulations surrounding VAT refunds.
The current legislation allows for unregistered farmers to claim a refund on VAT for the construction, extension, alteration or reconstruction of farm buildings or structures.
However, in recent months farmers have not been receiving VAT back for certain items for their farms which previously qualified for a refund.
These items include automatic calf feeders, meal bins, bulk tanks and barriers in sheds.
VAT refunds
Fine Gael Senator Tim Lombard told Agriland that he has been “inundated” with calls from farmers, the agri-business sector and banks about the matter.
Although there has been no major change to the legislation in this area, the senator said that a change in interpretation by Revenue has caused major confusion within the agricultural sector about what can be reclaimed.
As a result, he said that farm projects around the country are being “paused”.
“That pause isn’t good for anything. We all need to make sure we reach our climate targets, we need to make sure we reach our water targets that will happen on the back of investments and changing farming practises,” the Cork senator said.
He added that some farmers who do not receive milk cheques in January or February may have held back VAT receipts for cash flow purposes
“They are now left in a scenario where they’re really caught for cash because they don’t know whether or not the actual reclaim will go through,” he said.
Committee
Prior to Christmas, the Senator Lombard wrote to the Oireachtas Committee on Agriculture, of which he is a member, to request if an invitation could be extended to Revenue.
“We had a meeting of the agricultural committee yesterday (Monday, January 15) and we’ve agreed now to write to the Revenue Commissioners and ask them to come before the committee to explain the logic of this major change, which has such a huge impact on the farming community,” he said.
The senator explained that farmers could already be slow to spend after a very tight year in 2023.
“They might be of the view that this is going to be another 13.5% in some cases of a deduction to the value of what they were going to do. So they might pull back regarding the actual spending power.
“Farmers are generally concerned and confused about what the new regulation potentially could mean for them.
“There needs to be clarity brought forward from Revenue and I do believe this clarity needs to come sooner rather than later,” he said.
Senator Lombard said that the Oireachtas committee would hope that Revenue would “respond very promptly” to its request.
“We’re shadowboxing in many ways about this. We’ve been talking about what’s gone wrong and what’s gone right in this decision.
“There’s been no clear public statement by the Revenue Commissioners and they need to come before the committee.
“I would be very hopeful that they will because I think they obviously understand that there is clarity required,” he said.