Recent changes to the interpretation of the rules surrounding VAT reclaims have left farmers in financial difficulty ahead of the Christmas period.

The changes, which the IFA have classed as “sudden” and “unannounced”, have deemed milk bulk tanks, meal bins, automatic calf feeders, slurry scrapers and milking equipment as no longer eligible for a VAT reclaim.

Revenue has stated that it has not changed its approach to the refund order, with each claim assessed on its own merits.

The Irish Farmers Journal has spoken to several farmers affected by the changes who now bear the brunt of the changes to the tune of several thousand euro.

Many had used cashflow or bridging loans to finance their purchase in the expectation that VAT could be reclaimed, only to be refused in recent weeks due to the change in the interpretation of the rules.

With delays to payments under the Agri-Climate Rural Environment Scheme (ACRES) and a loss of VAT reclaim, many farmers are now facing financial difficulty or a heavy dependence on short-term finance and credit heading into the Christmas period.

Reference costs

The recent changes have also pushed TAMS reference costs further out of line with on-the-ground costs, with actual costs being 90% above TAMS reference costs in some cases.

Both the Irish Creamery Milk Suppliers Association (ICMSA) and the IFA, have called for a reversal of the changes, a retrospective payment to farmers refused VAT reclaims or the increase in TAMS reference costs if these changes are not attained.