Kieran Coughlan: The ins and outs of what you can reclaim Vat for on the farm
Revenue considers that automatic calf feeders constitute movable goods. File picture: Denis Scannell
Farmers who are not registered for Vat can reclaim it on construction, extension, alteration or reconstruction of a farm building.
It also includes fencing, drainage or reclamation of any land used for a farming business and construction, erection or installation of qualifying equipment for micro-generation of electricity for use solely or mainly for a farming business.
A claim is made under what is known as a Vat 58 reclaim. The procedure has moved exclusively to an online basis since 2019, whereby a claimant must now claim by calendar year, include all relevant details of each invoice which is forming part of the claim, and upload a copy of the invoices supporting the claim.
Along with the requirement to file Vat 58 returns online and attach the relevant invoices, Revenue will refuse to process any invoice with a value over €100 if the name and address of the farmer are not mentioned on the invoice. This can be an issue for cash-sale invoices where a farmer may not have a trading account with a particular supplier and the invoice is generated by the supplier on a cash-sale basis.
In such instances, the only avenue available to the farmer is to go back to the supplier to get the invoice updated with their details. Over the past couple of years, Revenue has in some instances been requesting photographs of the work done as further validation of the claim.
Over the past few months, there is a perception Revenue seems to have tightened up on the types of expenditure it is willing to accept as coming within the regulations.
The regulations which govern the refund of Vat for unregistered farmers are Statutory Instruments 201 of 2012 and there have been no changes to the regulations since then but perhaps the interpretation of the regulations has shifted.
The 2012 regulations did not specifically mention fixed equipment but the understanding amongst farmers and their accountants was Vat incurred on fixed equipment was generally refundable.
Historically, this would have included automatic calf feeders, milk tanks, milking machines, automatic scrapers, wash troughs, water pumps, wash-down pumps, fixed generators, feed bins and the like.
This now seems to be thrown into disarray and clarity is lacking on the types of equipment that Revenue seem to be willing to accept. The 2012 regulations and those that predated the 1993 regulations did not specifically mention fixed equipment as being a separate item upon which Vat was refundable.
However, within the Vat 58 form one could identify the fixed equipment and where it was installed. As such claim Vat on fixed equipment on the basis it formed part of the overall structure of the particular farm building.
The changes that have formed over recent months appear to relate to what is considered fixed equipment forming part of the overall structure of the farm building in question.
Responding to questioning in the Dáil, Finance Minister Michael McGrath said of those unregistered farmers seeking refunds on fixed equipment where there has been reconstruction or alteration of a farm building "each claim is assessed on its own merits".
Within further questioning, the minister gave greater clarity on the issue of calf feeders as follows: "Revenue is aware that there are numerous types of feed systems and that certain feed systems have changed or evolved to an extent that they do not require reconstruction of a building to install.
"Instead, they may be removed without causing significant damage. I am advised that Revenue has not changed their approach to the refund order, instead, each product is assessed on its own merits.
"Products that do not meet the conditions of the refund order cannot qualify for a refund of the Vat" and "Revenue consider that automatic calf feeders constitute movable goods and are therefore not provided for under the order."
As such, the prerequisite for any Vat claim is to assess whether the outlay has resulted in the alteration or reconstruction of a farm building and whether the equipment is mobile in nature.
It is hoped further clarity will be forthcoming perhaps in the form of updated Notes for Guidance from Revenue, particularly since the quantum of Vat involved can be very significant.
