Revenue: VAT claims approved for farm equipment considered a 'fixture'

Representatives from the Office of the Revenue Commissioners have told the Joint Committee on Agriculture, Food and the Marine that VAT refunds have been allowed where farming equipment is “considered a fixture”.

The Oireachtas committee discussed issues around VAT refunds for unregistered farmers with representatives from the Office of the Revenue Commissioners this evening (Wednesday, May 8).

The chair of the joint committee, Deputy Jackie Cahill, said that unregistered farmers have been able to claim back VAT on certain “qualifying expenditure” under the Refund Order which has been in place since 1972.

However Deputy Cahill also highlighted that he has been contacted by numerous unregistered farmers about “what can be claimed” and also about delays in refund payments.

Revenue operates the VAT refund scheme on a self-assessment basis and unregistered farmers have to submit their claims via its online service.

Chad Egan, a principal officer at the Office of the Revenue Commissioners, told the committee that Revenue has “not changed its interpretation of the law on the Refund Order”.

This was challenged by several members of the Oireachtas committee.

Egan said: “In recent times, Revenue’s risk assessment process has identified ineligible claims on certain types of farm equipment, which are outside the scope of the Refund Order.

“While farming equipment is not provided for under the order, equipment may be allowed where it is considered a fixture.

“A fixture is an item that is permanently installed in the farm building and, once installed, cannot be removed without causing significant damage or destruction to the farm.
building, or to the fixture itself”.

He also told the committee that Revenue had “demonstrated a significant amount of flexibility in relation to the administration of the Refund Order and gives due consideration to the context and nature of the claims that are made”.

Revenue

The Revenue Commissioners’ interpretation of what is a fixture and what claims for VAT refunds have recently been approved or refused was keenly debated during the committee meeting.

Egan said: Claims for fixtures must demonstrate the construction, extension, alteration, or reconstruction of a farm building.

“Claims which have been approved for a refund of VAT include water troughs that have been plumbed, meal bins over 10 tonnes in size, cubicle mats that have been bolted to the floor, hydraulic scrapers, drafting gates and new build milk parlours”.

But the principal officer at the Office of the Revenue Commissioners also told the Oireachtas Joint Committee that “VAT refund claims for other types of expenditure are not allowed as they do not meet the conditions of the Refund Order”.

He said these included heat and health monitoring systems and slurry bags.

According to Egan, Revenue is “currently engaging with the farming sector to explain the situation in relation to the law and the claims process”.

He outlined that it had met with both the Irish Creamery Milk Suppliers Association and the Irish Farmers’ Association.

Egan added and that it was “engaging proactively with both representative bodies with a view to providing clarification regarding meal bins, calf feeders, milk tanks, certain cubicle or slat mats, water systems and matters related to multi-year farming construction projects”.

“Once these outstanding matters are finalised, Revenue intends to publish updated guidance which will address any lack of clarity about the operation of the scheme,” he stated.

Egan also stressed to committee members that “the items for which VAT can be reclaimed under the Refund Order are determined by legislation”.

“Revenue can only refund VAT incurred on the particular business expenditure outlined above, in line with EU and Irish VAT law,” he added.

VAT refunds

Representatives from the Office of the Revenue Commissioners outlined to the Oireachtas Joint Committee what unregistered farmers are able to claim VAT refunds on, this includes:

Construction, extension, alteration or reconstruction of farm buildings or
structures;
Fencing, draining and reclamation of farmland;
Construction or installation of qualifying equipment for the purpose of
micro-generation of electricity for use in a farm business.

They also specified that the acquisition of farm equipment or machinery, is not permitted under the Refund Order.

The Oireachtas committee heard that for each of the past three years, Revenue received over 37,000 claims for VAT refunds from unregistered farmers.

According to Egan 96% of these claims were approved for payment.