13 Jun, 2024

Revenue clarifies VAT58 procedures

This summer, we have received comprehensive manual from Revenue regarding the VAT58 refund procedure for flat-rate farmers.

The new and comprehensive manual from Revenue covers the VAT58 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: 

"While we welcome the new guidance, we immediately sought further clarification from Revenue so that we can provide accurate guidance to farmers for much-needed refunds.”

For context, in the past VAT was reclaimed for 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 in nature.

After long discussions between Revenue, IFA and ifac, Revenue has issued a revised Revenue guidance manual outlining what they regard 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 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.