As mentioned in last week’s article, the deadline for this year’s Basic Payment Scheme is fast approaching.
If you’re in the mood for even more paperwork, it might be worth ploughing into your farm invoices, to check out if you can get a refund.
Remember, if you’re a farmer who is unregistered for VAT, you are nonetheless entitled to receive VAT back on capital improvements around the farm, by completing a VAT58 form which is available from the Revenue Commissioners’ website, or Revenue’s offices.
VAT is recoverable on the construction, extension, alteration or reconstruction of a building or structure used for the purposes of farming, and also on fencing, drainage or reclamation of any land.
The types of expenses which can give rise to a VAT refund include outlays on farm buildings, farm roadways, readymix concrete, slats and slurry tanks, reservoirs, farm water wells, fixed equipment such as gates, generators, fixed wash-down pumps, cubicles, fixed cow mats, feed barriers, drainage stone, drainage pipe, fencing posts and wire.
In contrast, VAT is not recoverable on moveable equipment such as round feeders, drills, welders, tractors and implements.
Budget 2012 also brought about changes to the VAT recovery rules, which now entitle unregistered farmers to recover VAT on qualifying micro-generation equipment, including wind turbines and photo-voltaic generating panels.
For VAT to be recoverable by an unregistered farmer, the expenditure must be on items for use in the farming business for at least a year.
For this reason, an unregistered farmer is not entitled to recover VAT on repairs, maintenance, fuel or other consumables.
Equally, a wind turbine or water well used exclusively for a private residence does not qualify for a VAT refund.
The total of any VAT claim must be for more than €125, but a VAT claim can be made for any unclaimed VAT within the past four years — which makes that €125 threshold easier to achieve.
There is no need to wait until after the end of the current tax year, so any expenditure already incurred in 2015 also qualifies for a refund now.
To complete the claim, you will need to submit original invoices as well as details of your PPS number, together with a completed VAT 58 form.
Over the past number of years, Revenue have become more sophisticated in dealing with tax payers’ affairs on a holistic basis, and in the event that a tax payer owes Revenue in respect of income tax, PAYE, Capital Gains Tax, or other taxes, or indeed where tax returns are outstanding, it’s highly likely that Revenue will withhold and offset any VAT to be recovered under the VAT58 process.
Revenue have always had the right to examine, audit and validate VAT58 claims, and validation of the claim can come in a variety of forms, including physical inspection, or Revenue contacting suppliers directly to confirm the works undertaken.
Just recently, Revenue have taken to requesting photographic evidence of the work done.
Refunds can be processed either directly to a tax payer’s bank account, or alternatively by cheque.
The application process is by way of paper application made to Revenue Commissioners, Sarsfield House, Francis Street, Limerick.
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