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A test case in the Kerry Co-op patronage share taxation issue now seems likely. The case could evaluate the legal strength of Revenue’s assertion that farmers may have unwittingly incurred a significant tax liability through the purchase of patronage shares from Kerry Co-op.
Last Friday, the Kerry Co-op board met, drafted a letter and delivered it to Revenue’s office in Tralee asking for a test case to be allowed.
A Revenue response by letter seemed to pour cold water on the proposal. It suggested that individuals could engage with Revenue, every farmer had different circumstances and that an appeals mechanism was in place.
Further direct engagement between Revenue and Kerry on Wednesday clarified the situation, with Revenue saying it would contemplate an individual farmer bringing a test case to be heard through the courts. It is believed a test case would effectively freeze the 21-day time frame farmers have been given to respond to the letters they received.
The Irish Farmers Journal further understands that James Doyle, the chair of Kerry Co-op who recently lost his seat in a regional co-op election, has been re-invited on to the board to bring his vast expertise in the response to the current issue with Revenue.
Important meeting
On Thursday 1 December, a meeting is being held by Kerry Co-op for co-op shareholders and their tax advisers. The Irish Farmers Journal understands that the briefing will provide an update on the direct engagement that Kerry Co-op has had with Revenue and the proposed next steps. The meeting is at 6.15pm in the Brandon Hotel Tralee.
Background
Last week it emerged that Revenue had written to some 400 of Kerry’s 3,500 milk suppliers outlining a tax liability on patronage shares relating to the years 2011, 2012 and 2013.
Revenue believe the shares should be treated as income. The value Revenue is attaching to the shares is not the €1.25 face value paid for the shares, but rather the value Kerry Co-op shares were trading for in the grey market. This values shares at €95 for 2013, and implies a liability of thousands of euros for many farmers.
The letter urged individuals to engage with Revenue within a 21-day time frame, saying that some farmers will be liable and some will not.
Revenue confirmed that there would be an appeals mechanism for farmers. Shareholders in other co-ops and their tax advisers are closely watching how this plays out.
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