New guidance has been published by Revenue today (Tuesday, June 4) on the application of the VAT Refund Order for flat-rate farmers.
The legislation sets out that farmers can only claim refunds for VAT in relation to:
- The construction, extension, alteration or reconstruction of farm buildings or structures;
- The fencing, draining or reclamation of farmland;
- The construction, erection or installation of qualifying equipment for the micro-generation of electricity for use mainly in the farm business.
The new guidance comes after months of uncertainty over the issue of certain VAT refunds.
Unregistered farmers have been able to claim back VAT on certain “qualifying expenditure” under the Refund Order since 1972.
VAT
But farming organisations have been at loggerheads with Revenue over the issue of VAT refunds for certain items of equipment which previously they had been allowed to claim on.
Today Revenue stated that “mobile or moveable farm equipment and machinery are not allowed under the order”.
“Merely fixing, attaching, or bolting a piece of equipment or machinery to a building does not qualify it for refund under the order,” it outlined in the new guidance document.
This means that farming equipment not covered by the Flat-Rate Farmers Refund Order includes automatic calf feeders, cow mats – not fixed – robotic scrapers and slurry bags.
Revenue
Revenue has set out in the new guidance document that farm buildings “are buildings that are fixed to or in the ground which cannot be easily dismantled or moved”.
It also stipulates that “generally, buildings and structures are not easily dismantled or moved without considerable effort, cost and substantial damage or destruction of the building or
structure”.
According to Revenue in all cases, the building or structure “must be designed solely for the purposes of a farming business” and detailed that examples of farm buildings include cow or calf sheds, cubicle sheds, slatted sheds, or parlour sheds.
Examples of farming structures include cattle grids, farmyards, silage pits, silos and slatted tanks.
Revenue has also confirmed that a number of farming products that may also be considered structures.
These include:
- silo feed bins;
- silo milk tanks;
- slurry pits;
- slurry tanks;
- trough/ water trough systems.
Feed/meal bins
Revenue acknowledges that feed and meal bins come in various shapes and sizes and has highlighted that “silo feed, meal bins are bulk animal feed storage structures which may qualify under the order”.
“Feed, meal bins that qualify under the order are those which are silos – elevated on a platform or legs which are permanently installed on a thick concrete base and bolted to the base,” it added.
However, Revenue has also warned that the term “feed or meal bins” is used to describe portable or moveable containers and buckets which hold feed for animals.
“Such feed or meal bins are not refundable under the order,” it has stated.
Revenue has also specified today that slurry bags are “not considered structures and are not refundable under the order”.
“Mobile slurry tankers used to spread the fertiliser are also not refundable under the order,” it also added.
But outdoor water trough systems are refundable under the order.
“Troughs must be made of concrete to qualify for refund under the order. Troughs made from plastic are not allowable under the order,” Revenue also stated.
Fixtures
According to Revenue specific rules apply to fixtures and fittings “to ensure that the VAT reclaimed relates to the construction, extension, alteration or reconstruction of a building or structure” which is designed solely for the purposes of a farming business.
“Fixtures are goods which have become closely linked to or integrated into a building in such a way that they cannot be removed without substantial damage or significant alteration being caused to the goods themselves or to the building,” it detailed.
It also highlighted in the new guidance document that “fittings are goods that, though often attached to buildings, can be removed without substantial damage or significant alteration being caused to the goods themselves or to the building to which they are attached”.
But it has clarified that where the installation of goods “is considered a fixture” VAT incurred by farmers “may be allowed”.
Examples of items covered include:
- Animal Mats (fixed);
- Cubicles;
- Slatted pens,
- Drainage systems;
- Crushes (fixed)
- Feed barriers or rails.
However Revenue has stipulated that only mats which “are fixed using adhesive, concrete, nails or anchor bolts are deemed a fixture, and can be refunded under the order”.
Examples include cubicle mats and slatted mats. Slat mats claw pinned within the slat are also allowable.
“Interlocking mats (modular cow mats) can be removed without destruction of the mat and do not qualify under the order.
“However, if the interlocking mats are bolted to the floor, then the VAT may be refunded,” it added.
Farming equipment/machinery
Even if farm equipment and machinery is bolted to the ground or in a farm building or structure this does “not necessary imply that they are a fixture” Revenue has outlined.
“To qualify under the order, the farming equipment or machinery must be permanently installed in a newly constructed/altered or extended farm building and once installed, cannot be removed without causing significant alteration, substantial damage, or destruction to the farm building or to the equipment or machinery itself,” it detailed in the new guidance document.
According to Revenue this means that items such as robotic scrapers are not integrated within the farm building and do not qualify under the order however an automatic scraper system and wire rope scrapers are allowable under the order.
Robotic milking machines, in line milk parlours, herringbone milk parlours and rotary milking
parlours are also refundable under the order.
But farming equipment not covered by the VAT Refund Order includes:
- Add-on milk points / clusters;
- Automatic calf feeders;
- Calving cameras;
- Cow brushes;
- Cow collars;
- Tax and Duty Manual;
- Flat-Rate Farmers refund order;
- Cow mats (not fixed);
- Dust cyclone / cyclone separators;
- Egg vending machines;
- Feed bins (excluding silo feed bins);
- Heat and health monitoring systems;
- Milk vending machines;
- Pasteurisation tanks;
- Robotic scrapers;
- Security cameras;
- Slurry bags;
- Slurry spreaders;
- Yard scrapers.
Fencing
Revenue also sets out in its new guidance document today that expenditure incurred on fencing, draining or reclamation of farmland “is allowed under the order” and that this fencing can be fixed or mobile or moveable.
But certain expenditure on fending that is not allowable includes batch latch gate release systems, gripple tools or tree and hedgerow plants outside of those suitable for stock proofing.
Revenue has also advised that VAT incurred on the draining and reclamation of farmland is refundable under the order and while VAT paid on the hire of machinery or equipment used for land reclamation and drainage is allowable under the order.
But VAT on the purchase of this machinery is not allowable.
The new guidance document also sets out that VAT incurred on the construction, extension, or installation of qualifying equipment for the purpose of micro-generation of electricity is refundable under the order where it is for use solely or mainly in the farming business.