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Independent.ie

Thursday 19 January 2017

'Somebody had to shout stop' - Farmer who exposed tax loophole speaks out

Alo Mohan, the poultry farmer behind the allegations of tax abuse in the sector, believes it is an issue that has implications for the entire livestock industry

Published 30/11/2016 | 15:00

Alo Mohan, the poultry farmer behind the vat allegations
Alo Mohan, the poultry farmer behind the vat allegations

Are the big corporate interests bullying the common man in County Cavan?" asked Senator Ronan Mullen in the Senate last week.

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His comments came after he quoted the Farming Independent's recent report on allegations of a multi-million euro tax abuse in the poultry sector.

"There is a troubling report in this week's edition of the Farming Independent on possible abuses in the poultry sector. It is certainly embarrassing to have our dirty linen laundered at European level, but we should be grateful that it is being laundered. However, it is the human side which concerns me more," stated the Independent senator.

He was referring to the plight of Cavan poulty farmer, Alo Mohan, whose family have been part of the poultry sector for 60 years.

However, Mr Mohan's farm - which has the capacity to raise over one million birds a year - has has been lying idle since last January.

His problems started when he expressed concern with the way VAT schemes were being structured in his local poultry co-op, Sicín in 2014.

Its treasurer Nigel Reneghan, maintains that the co-op, and indeed all poultry producer groups are operating within the law.

The issue that Mr Mohan had was that the co-op was claiming back VAT on inputs such as fuel and wood shavings bought by its members through the co-op, even though the farmers themselves were not registered for VAT.

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Mr Mohan felt uneasy about receiving the VAT back from the co-op on top of the 5.4pc flat-rate VAT that accrues to unregistered farmers.

"If every co-op in the country was able to claim VAT refunds for farmers that were unregistered for VAT, the exchequer purse would collapse," said the Monaghan native.

"Worse again, if a few traders were allowed exploit this loop-hole, they would be able to undermine the market for everybody else," he said.

Every that Alo turned to, bar the Revenue, seemed to be of the same opinion.

"I looked for independent legal and financial advice, and the message was clear: that us growers shouldn't enter this arrangement without first getting it signed off by the Revenue," he said.

"So then I rang the Revenue. I emailed them, I went up to Dublin to meet them. For the next two years I was kicked around from Billy to Jack by various officials in the Revenue, but none of them would give me anything in writing to say that this was ok.

"They were giving me verbal assurances, but what good would that be if they changed their mind in five years' time, and came looking for all this VAT back, along with interest and penalties - and me with nothing to prove otherwise?"

Alo's reluctance to join the co-op was costing him dearly - to the tune of €25,000 per year.

With nowhere else to turn, Mohan contacted MEP Marian Harkin, who realised that this was a serious case that deserved a better hearing.

She lodged a complaint with the EU Commission in June, and suddenly things started to happen. Top officials in the Revenue looked for meetings with Alo and his colleagues.

Letters started to fly, and one even stated what Alo had always looked for - that the VAT scheme as operated by the co-op was kosher. Despite this sudden willingness to endorse the system, the Irish authorities also appeared to be having fresh doubts.

A letter from the Revenue to the EU Commission office that investigated Ms Harkin's complaint admitted that there might well be some issues with loop-holes in the poultry sector.This sea-change was confirmed by Michael Noonan this month week when he addressed the Economic and Monetary Affairs Committee in the European Parliament.

He admitted under questioning from Ms Harkin that "VAT avoidance schemes were being developed and probably in place, particularly in the poultry sector".

He added that he had introduced changes in the Finance Bill specifically to tackle "tax evasion in the poultry industry that gave competitive advantage to those who used it rather than those who didn't".

Ms Harkin notes how crucial the role of EU institutions was in getting progress in Alo's case.

"It proves that Europe does listen to the individual with a case to make," she said.

It was also a massive vindication for Alo Mohan.

Shunned

He feels shunned by his former colleagues in the poultry sector and, despite the decision to close the loop-hole by the Department of Finance, the IFA continues to fight for the system to be maintained.

Nigel Renghan, who doubles as the IFA's poultry chairman, is adamant that without the double refund, the Irish poultry industry would be "dead in the water".

For this reason Reneghan has urged poultry farmers to "lobby hard their local politicians" to delay the introduction of the new laws proposed by Minister Noonan in the recent Finance Bill. It's a stance that has left Alo Mohan more isolated than ever.

"If I'd known how long this was going to go on for and the way that I was going to be treated, I might not have had the courage to go this road," admits the candid family man.

"I've still got borrowings to pay and four kids to put through school and college, so it's no exaggeration to say that this has been the worst time in my life. But I've come too far, and this is too big to give up now. I never wanted to be this person, but somebody had to shout stop."

When contacted the Revenue said it was "legally precluded from unauthorised disclosure of taxpayer information".

"Revenue makes best use of all information it receives, and investigates all reports on ...tax evasion. However, we don't report back to any individual on the outcome of a report she/he makes of tax evasion, nor do we comment on the tax affairs of any individual," it said.

Carton

Mr Mohan's former processor, Carton, also denied having any role in the VAT issues raised by its former supplier.

It said it deals with both VAT registered and unregistered farmers, and that it was the choice of the farmer to register for VAT. It also noted the independence of supplier co-ops.

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