IFAC urges Carlow farmers to claim VAT refunds under new Revenue guidance

Ifac, Ireland’s farming, food and agribusiness specialist professional services firm has welcomed Revenue’s recent VAT 58 guidance. The new and comprehensive manual from Revenue covers the VAT 58 refund procedure for flat-rate farmers. This refund procedure allows non-VAT registered farmers to claim a refund for the VAT incurred on building works and land reclamation, draining, and fencing.
Marty Murphy, Head of Tax at ifac commented:
"We welcome the new guidance to provide clarity to Carlow farmers for much-needed refunds but there is a lot left off that previously was accepted.”
For context, in the past VAT was reclaimed for nearly all and any works incurred by the farmer, no matter the level of expenditure and nature of the works. However, over the past 18 months, a large volume of the VAT 58 claims has been rejected by Revenue. These claims mostly related to items that would have been regarded as fixtures and fittings located within a building and were not necessarily an integral part of the building. Some larger structural items, such as slurry towers, have also been harshly rejected on the basis that they were not structural.
After long discussions between Revenue, IFA and ifac, Revenue has issued a revised Revenue guidance manual outlining what it regards as qualifying and non-qualifying expenditures. It broadly follows ifac’s submission made in February of this year.
The expenditure falls into three categories namely:
1. Structural work
2. Farm equipment
3. Fixtures and fittings
The permanency of the subject matter of each claim is a key indicator along with the movability of the subject matter, where an item can only be moved at significant expense to the farmer, with the potential risk of damage or destruction of the asset. These are both key factors in determining if the expenditure is likely to qualify for the refund.
The manual also mentions that both silos and cow mats (fixed in place) are to be regarded as qualifying expenditures.
“Revenue's guidance is comprehensive and contains both positive and negative points. Any farmer who has previously had a VAT 58 claim rejected or has been holding back on submitting a claim should contact their accountants and tax advisors to discuss how the new guidance affects them.
“While the guidance itself is welcomed, the underlining differences between, for instance, fixed and non-fixed cow mats will likely cause a level of confusion and uncertainty. There is a lot more ground to cover but this guidance makes a good start and provides clarity on Revenue’s position,” Marty continued.
A top-ten accountancy firm with a 30-office footprint and a dedicated team of 500 professionals, ifac has been committed to serving its farming, food, and agri-business clients across the country for the past 49 years.