Kerry co-op shareholders have until the end of February to respond to Revenue's assertion that they have a tax liability due to the purhcase of patronage shares in previous years.
The 400 farmers first contacted last month today received a second letter from Revenue, providing welcome clarification following three weeks of anger, confusion, and fear among Kerry milk producers.
The key points are:
Revenue still hold that 'the true market value' of the shares, (presumably the grey market value of the shares) "is correctly assessable as a trading receipt of your farming business and is therefore assessable to income tax. The shares essentially represent a form of payment received for the milk supplied by you and therefore the value of the shares forms part of your trading income for the relevant years".
Revenue will seek payment on any assessed tax liability for the three years that patronage shares were purchased that remain within the timeframe allowed to Revenue (2011, 2012 and 2013). This confirms last week's report in the Irish Farmers Journal on Revenue's evidence to the Oireachtas Finance committee. Some had interpreted Revenue's stated intention to initially itemise the assessed liability for each shareholder for the 2011 year as evidence that tax for 2012 and 2013 would not be sought. Not so.
In relation to a test case, Revenue say: "Revenue has no difficulty dealing with a single agent on behalf of all or a group of affected farmers but Revenue would, having regard to our obligations and commitments as regards the confidentiality of your personal tax affairs, require confirmation from you in writing to the effect that you wish to designate Kerry Co-op or its agent to represent you in this matter."
The timeframe for engagement with Revenue has been extended to 28 February 2017. "This gives you time to complete the engagement including as necessary any submission or additional submission you may want to make, and if you believe that you have a tax liability to consider what your proposal or additional proposal you may want to make as regards any payment arrangement, having regard to your financial circumstances."
If an individual appeals their case, it will put a halt on any action by Revenue to collect the tax involved and any interest arising. This will not affect the farmer's entitlement to a Tax Clearance Certificate.
If an individual accepts revenue's assessment and pays the tax, should an appeal by another individual to the Tax Appeals Commission (TAC) prove successful, "Revenue will of course ensure that the decision of the TAC that is more favourable to you, if you had appealed, will be applied to you. To be clear, you will be treated the same as those who had waited on the TAC decision".
It's far from an acceptable solution for farmers, but at least the immediate problem of the December deadline has been resolved. It is expected that most farmers will nominate the co-op to represent them, and that the matter will then be tested before the TAC or the courts.