The Tax Appeals Commission has ruled against two separate but similar appeals taken by dairy farmers who were told by Revenue they were unable to claim back the VAT they paid on purchasing and installing milking equipment.

The commission’s decisions follow a 2024 change in Revenue’s interpretation of the farm investment items on which non-VAT-registered farmers can receive VAT refunds on.

The updated rules allow for VAT to be claimed back for investment items that entail a degree of construction or the alteration of buildings, but the recent appeals confirmed that the installation of cluster flushes, milk pumps and heat recovery units is not seen to meet this threshold.

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The first farmer who appealed to the commission was seeking the overturning of Revenue’s refusal to grant them just under €2,000 in VAT back for a 500l single-cell heat recovery unit, a six-unit cluster flushing system and a variable speed milk pump, with all items purchased in 2022.

Combination

The commission said that the combination of the words “construction”, “extension”, “alteration” or “reconstruction” used in secondary legislation on flat-rate VAT farmers brought forward by the then-minister for finance in 2012 indicates that eligible claim-backs must relate to “building work that is carried out to a farm structure”.

Its decision viewed the installation of the parlour equipment as relating to an alteration of the milking machine, but not to the parlour building.

The appealing farmer had argued the case that the appeal should be considered from a basis of “fairness”, but the commission stated that its decisions cannot “dis-apply legislation for reasons of perceived unfairness or inequity”.

Revenue’s original decision to not allow the farmer claim the VAT back was upheld.

Similar case

The similar case of the second farmer regarded an appeal to Revenue’s refusal to refund just under €3,000 for the purchase and installation of a 16-unit cluster flushing system was also unsuccessful.

In this case, the commission ruled that the installation of the cluster flush system “did not involve the construction, reconstruction or extension of the farm building in which it was housed” nor did it constitute an “alteration” of the parlour building.

“While there was a small hole drilled in the internal wall dividing the milking parlour and the dairy room, so as to allow the connection of the water reservoir and the mains water supply, this work did not alter the state of the dairy building.

“Rather, the drilling of the hole constituted superficial and remediable work of a kind comparable to that which might be done in order to facilitate the installation of a domestic fitting or appliance,” the decision stated.