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As reported last week, DAERA has had a rethink on the eligibility criteria for the money coming to beef farmers from the coronavirus support package.
Cattle killed between 16 February and 30 June will receive £33/head, with an additional £40/head for cattle slaughtered between 29 March and 16 May. But rather than the money going to the person who owned the cattle for at least 30 days pre-slaughter, it is going to the owner at the point at which markets fell.
The thinking behind that is that the funding is more likely to go to farmers who took a financial hit – including someone who produced strong stores, selling them from mid-February onwards.
However, a 30-day retention period would have excluded cattle presented by dealers and those who put animals through their herds simply to avail of the agricultural flat rate VAT scheme. They are now in line to get some of this COVID-19 money from DAERA.
Either way, while the support scheme isn’t perfect, it is still a very welcome injection of cash coming from Stormont.
Flat rate VAT
Looking ahead, it is worth noting that the flat rate VAT scheme will effectively end for most beef finishers this December. Under the new rules announced by UK chancellor Rishi Sunak earlier this year, once annual turnover from farming exceeds £230,000, a business must register for VAT instead.
At present, someone in the flat rate scheme is able to charge a levy of 4% at slaughter to compensate for the fact that they cannot claim VAT back on inputs – on a 380kg animal worth £1,400 it is an additional £56 (or 15p/kg).
Compete
Of course farmers in the scheme are doing nothing wrong, and have made good use of a system that was introduced in 1993 to free up small farmers from the administrative burden of VAT. However, for those either excluded from the scheme, or not in a position to split off a cattle finishing enterprise from other farming activity, it has been difficult to compete around a ring.
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