Following its first letter to Kerry Co-op shareholders in November demanding payment for income tax on the estimated market value of patronage shares received in 2011, 2012 and 2013, the Revenue appeared to soften its stance in a second letter mid-December.

“Assessments for 2012 and 2013 are being deferred for the moment,” Kerry tax district manager Anne Dullea wrote to the 400 farmers. This was in fact the plan all along.

Internal communications in October show that Revenue officials initially planned to target taxpayers who had received patronage shares in 2012 and 2013.

It was only when Anne Dullea presented her case to the Revenue’s business management executive on 27 October that she introduced 2011 into the equation.

Four-year rule

The four-year rule prevents the Revenue from going further back in time. In this case, farmers filed their 2011 tax returns in 2012, leaving until the end of 2016 for the Revenue to query their self-assessment.

This left little time to tackle patronage shares issued in 2011, and papers from the 27 October meeting show the decision was made to target those farmers who received more than 100 such shares.

The rationale behind that number is not explained in the documents obtained through the Irish Farmers Journal’s freedom of information request. When asked about it at an Oireachtas hearing in December, Charlie Phelan, Revenue Commissioners assistant secretary for the southwest region, said: “All our interventions are based on risk. We took the 400 people who received the largest amount of patronage shares.”

It appears that the Revenue just scrambled to fit as many taxpayers as it could by the end of the year, working from the top town.

Exposures

This does not mean, however, that other Kerry suppliers are off the hook. The minutes from the 27 October meeting already stated that “any exposures in 2012 and 2013 will be pursued in 2017”.

This time, the Revenue will also review the tax returns of “those who received less than 100 shares in 2012 and 2013”.

If the Revenue finds they have an income tax liability on their patronage shares, they will receive the same letters this year.

Internal documents show the Revenue has a full breakdown of patronage share recipients during those years and estimates their numbers at 3,500, ie the full number of active Kerry suppliers.