Money Mentor: if I register for VAT as an electrician, what happens to my farm?

Question: I’m a dairy farmer in Kilkenny, but I also work full-time as an electrician. My work as an electrical has grown over the years and I’m close to the VAT threshold now.

I’m planning to build a new shed on the farm and someone mentioned that if I was VAT-registered I could claim back the VAT, using a VAT 58.

I’ve never been VAT- registered before and everything is currently in my own name. If I register for VAT for the electrical business, does that affect the farm as well? And should I be thinking about setting up a company?

Answer: You’re in what I’d call a modern Irish farming situation. The farm isn’t the only income anymore. There’s a strong off-farm trade as well – and in your case that trade is now big enough to drag VAT into the picture.

The key thing to understand is this: once you register, you register as a person – not as a trade.

If you stay as a sole trader and register for VAT because of the electrical work, Revenue don’t see ‘electrician Marty’ and ‘farmer Marty’. They see one taxable person.

That means your VAT number covers everything you do in business. So yes – the farm is pulled into the VAT net as well.

You won’t be able to say the electrical work is VAT-registered but the farm isn’t. It doesn’t work like that. Now, that isn’t necessarily a bad thing. In fact, it can simplify matters. But it does mean you need to think beyond the shed.

The VAT 58 angle

VAT 58 refunds are there for unregistered farmers who incur VAT on certain capital items, including farm buildings.

Once you become VAT-registered, you don’t use a VAT 58. You reclaim VAT through your normal VAT return.

So, if you are going to be registered anyway because of the electrical work, the shed VAT will come back through your regular VAT filing.

The mistake would be registering just to claim VAT back on one shed without looking at the wider picture. To me, the more important question isn’t the VAT 58.

It’s this: why are you running two significant businesses in your own name?

Most electricians operate through companies. There’s a reason for that. One bad job, one claim, one accident – and your personal assets are exposed.

At the same time, dairy farms of scale are increasingly being structured through companies as well, particularly where profits are being reinvested or succession is on the horizon.

You are effectively combining:

By doing this, you are placing both under one personal tax and legal umbrella. That’s not wrong – but it is unusual at this stage. The question may not be should I incorporate? It may be should I separate these properly?

Think about risk

People often focus on the 12.5% corporation tax rate. That’s only part of it. The more immediate issue is risk.

Electrical contracting carries commercial liability risk. Dairy farming carries environmental, employment and borrowing risk. At the moment, everything sits in one place – you. That’s fine while things go well, but it becomes uncomfortable if they do not.

So what should you do?

Before you register for VAT or pour concrete for the new shed, sit down with your accountant and map it out properly. Look at:

In your case, the conversation probably isn’t just about incorporation. It’s about structure. Two proper businesses deserve proper thinking around how they sit legally and tax-wise. VAT is just the trigger that’s forcing the discussion. And that’s no harm.

Marty Murphy is head of tax at ifac, the professional services firm for farming, food and agribusiness.

VAT registration applies to the person, not individual trades. If you register as a sole trader, both the farm and electrical business fall under the same VAT number.

Once VAT-registered, you reclaim VAT through returns, not through a VAT 58.

Running two growing businesses in your own name can expose your personal assets to risk.

Before registering for VAT, review whether the farm and electrical business should be structured separately or incorporated.