Farm Ireland
Independent.ie

Sunday 20 August 2017

Revenue claim they are owed millions from Kerry shareholders

Darragh McCullough

Darragh McCullough

Hundreds of Kerry milk suppliers have received Revenue letters demanding the payment of tax arrears on shares farmers received for their loyalty to the global dairy giant.

The Revenue Commissioners are seeking income tax on part of the 600,000 'patronage' shares issued by the co-op during the years 2011, 2012 and 2013.

Revenue have valued each share issued in 2011 at €65, €75 in 2012 and €90 in 2013.

The move has provoked outrage among Kerry suppliers, some of whom insist that they will contest the claims in court. The amounts involved are significant, with a supplier milking 80 cows and annually receiving a new co-op share per 1,000 gallons of milk supplied looking at an under-declaration of income of over €20,000.

At marginal tax rates, this could result in a tax liability of over €10,000.

"It is Revenue's position that [the shares] need to be included in accounts as additional trading income subject to income tax, USC and PRSI at the appropriate rates, based on their market value," states the letter.

It also points out that the farmers in question have 21 days to respond to the letter in order to "minimise potential penalties together with avoiding publication and prosecution".

Revenue were unavailable to comment on why they were focusing on the years 2011-2013 when the patronage scheme started in 2000.


The valuations are a significant discount on the nominal value of the co-op shares, which are equivalent to 6.14 shares in Kerry Group Plc, which trade today at close to €65 each.

So far only 400 out of a total of 3,400 suppliers have been contacted, prompting fears that this may be an initial move by Revenue before they spread the net wider within the region and beyond.

ICMSA president John Comer
ICMSA president John Comer

Many other co-ops around the country have traditionally rewarded their farmer suppliers and customers with 'loyalty' shares, albeit in lower value businesses.

Floatation

Kerry milk suppliers have been the envy of milk suppliers everywhere because of the massive value that they built up through their shareholding in the €11.5bn Kerry Group Plc since the company's floatation in 1986.

While the co-op originally owned 80pc of the business, seven successive 'spin-outs' have seen the co-op sell off over 80pc of their holding in the Plc.

However, the move is unlikely to affect farmers who have benefited from share spin-outs over the years.

Revenue stressed that the Kerry share values should be considered part of a farmer's income only if they were issued on the basis of the level of trade with the co-op.

ICMSA President, John Comer, said that his organisation has been receiving many calls from hugely concerned members regarding the "out of the blue" tax demand. He added that ICMSA will be seeking further clarification from Revenue given the very serious consequences for individual farmers.

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