The Kerry Co-op board has written to shareholders to clarify the tax implications of share exchanges or spin outs.

The letter, which claims that “significant misinformation” was spread at the recent AGM of the co-op, contains comprehensive opinion obtained by the co-op from Deloitte.

It states that the tax relief known as a “section 701” is only available to agricultural societies.

Two tests are in place for this relief to apply – a majortiy of co-op members must be “mainly engaged in husbandry” and a majority must also derive the principal part of their income from husbandry. Were these criteria not to be met, Deloitte states, the tax bill would be significant.

The reduction of the proportion of “non-farming” shareholders is recommended as an option prior to any future spin-out by way of a share buyback.

More specific advice will be provided, but not until late this year at the earliest.