The National Dairy Council’s (NDC) financial accounts for 2024 show a loss of just over €3m, with the outcome for the year driven by a write down of VAT receivable balance of €2,887,847 and a provision for the repayment of VAT refunds received of €871,691.

The adjustment relates to a decision by the Tax Appeals Commission (TAC) on an appeal made by the NDC on Revenue’s refusal of repayments of VAT on purchases made between 2016 and 2024 (see Figure 1).

In a statement, the NDC said it made the decision to appeal to the TAC following professional taxation and legal advice from its advisors, Deloitte.

The appeal was heard in 2023, with the TAC issuing its ruling in January of this year.

While the TAC did not identify a specific amount of VAT repayable or refundable by either party, it said that the NDC should undertake an apportionment exercise with Revenue to determine the amount of VAT recoverable.

Since 2016 the NDC has reported the unrefunded VAT as a debt owed to it (see Figure 1), because the external professional advice it had obtained on the matter led the directors to believe the NDC would “more likely than not, be successful in our appeal”.

It also classed the refunds it had received from Revenue as a contingent liability.

The result of the TAC ruling is that the unrefunded VAT can no longer be classified as a debt as the recoverability of it is in doubt, and the contingent liability is now a potential liability which the directors estimate to be €871,691.

In the NDC’s accounts for 2024, these are listed as an “exceptional item” of €3,759,538. The body had an operating profit of €706,024 in the year, leaving an after-tax loss of €3,054,868.

Speaking to the Irish Farmers Journal, NDC CEO Emma Walls said it is “keeping all options open” on avenues for further appeal and that the NDC “remains acutely aware of its obligations to Irish dairy farmers who fund the organisation through the milk levy”.

She confirmed that since the TAC determination, and until such time as the apportionment exercise with Revenue is complete, the NDC filled returns paying VAT on its sales but not seeking to recover VAT on its purchases.

This is not the end of the NDC’s VAT issues. It is facing through its membership of the European Milk Forum – an EU-wide industry body for the promotion of dairy products – a very similar looking potential VAT issue in France.

The NDC said that the proportion of VAT under review with correlates with its participation in relevant EU projects in the group amounts to €538,664.

The European Milk Forum have obtained external professional advice on this matter and believe they are “more likely than not, to achieve a successful outcome on this issue”. The NDC has made no provision for the amount in its financial statement for 2024.