Claim back your VAT in good time

By Paul Mooney

12 April 08 : Over the coming months, thousands of farmers will become eligible to reclaim a couple of million euro in VAT that they paid out on building work and building materials - so this week I will look at the paperwork involved.

Teagasc buildings specialist Tom Ryan, of Kildalton, has come across a small number of farmers who were slow to move on getting back their VAT. This makes no sense, given that the sums involved can be large and delays can rack up more bank interest. The VAT on a building costing €100,000 all in can be €12,000 if you're paying a building contractor, and possibly higher if you buy materials yourself and pay VAT at 21%.

You don't have to wait until the building work is finished to start reclaiming payment. Essentially, once you have invoices on hand, you start reclaiming VAT using Revenue's Form 58.

For the many farmers with building work already started, it makes sense to reclaim the VAT before applying for the grant aid under the Control of Farm Waste or Farm Improvement schemes. The reason for this is that both applications require original invoices. However, reclaiming the VAT is simpler, and Revenue will generally have your documentation back to you within a few days - after which they are available for sending to the Department.

Documentation sent in to claim a Department grant can take longer to go through the system, which could delay reclaiming the VAT if it's not already done.

It's possible to reclaim the VAT on a building project over two or more applications if, for example, stage payments are made to a builder, or if capital items, such as a milk bulk tank, are bought.

Revenue stamp your invoices to show that the VAT has been reclaimed, and to prevent a second reclaim on the same invoice. There is a minimum claim of €126.

Tom offers the following advice for farmers reclaiming VAT:

To get back the originals of invoices, you must include a copy that Revenue will retain. Tom suggests making and keeping a third copy of the invoices as a precaution.

Include a note stating that you need the originals back, and want them as soon as possible for grant purposes. This will obviously become more important as we move nearer to the end of the year and the 31 December deadline for completion of work and submission of all documents to the Department

If you go to the co-op or agristore to buy materials for a building - eg drainage pipes - don't have non-reclaimable items put on the same invoice - eg bags of meal, sprays, tools, silage covers, household items, etc. You may find yourself having to separate out the VAT on the different items when filling in Form 58.

Delaying a reclaim costs you money. If you are owed back €13,000 in VAT, for example, then leaving this run on for a year, with finance costing 10%, would cost you approximately €1,300.

Any farmer buying in a shed from Britain doesn't have to pay any VAT if he has a VAT number of his own - i.e. if he is registered for VAT - or if he buys it through a contractor (who would, in any case, be registered). However, where a farmer himself pays VAT to Britain, he won't be able to claim it back from the Revenue Commissioners here.

Filling in the form

SOME farmers will ask their advisor to reclaim the VAT for them, and some will ask their accountant, but many will do it for themselves, often with family help. The form involved is Revenue's VAT Form 58.

The LoCall number is 1890-252449, and the standard telephone number is 061-212799. General Revenue forms can also be ordered over another Locall number, 1890-306706.

Alternately, the form can be printed off the Revenue.ie website. Click on the link 'Forms' on the left of the webpage, then click on 'VAT (Unregistered) Repayment Application Forms' and, finally, click on 'Form VAT 58'.

The form can be printed out and filled in, or alternately filled in on the screen and then printed off. Either way, print out, complete and retain an extra copy for yourself.

The form is straightforward, with four sections to fill in. It spells out what specific VAT amounts are refundable and what amounts are not. In Section 4, you give a breakdown of the amount of VAT you are reclaiming. An original invoice is required for each sum listed here.

Completed forms should be sent to the following address:

Strategic Planning Division, VAT Unregistered Repayments, Third Floor, River House, Charlottes Quay, Limerick.