Farmers at risk of failure as result of tax demand
Farmers' livelihoods in Kerry are now at risk of failure as a result of Revenue's decision to hit hundreds of Kerry Co-op members with fresh tax demands at a time of already intense pressure on the sector.
400 milk supplying members of Kerry Co-op were left reeling last week after receiving letters from Revenue demanding they pay tax on the 'patronage' shares issued by Kerry Co-op.
The letters came just weeks after farmers had settled last year's tax demands with money borrowed from the banks in many cases. Some of the biggest suppliers are now facing tax bills of upwards of €25,000 with just days left to respond to Revenue before the agency takes further action and publishes the names of the alleged defaulters it has threatened by letter.
One Kerry TD is now calling for the Chairperson of the Revenue Commissioners to answer questions on the decision before the Oireachtas Finance Committee.
Revenue is meanwhile calling on all farmers in receipt of the letters to engage immediately with the service.
The tax demand came like a 'bolt out of the blue' according to ICMSA President John Comer, in letters setting out Revenue's belief the patronage shares issued by Kerry Co-op constitute additional trading income rather than assets - regardless of whether or not they were sold or merely held.
Shares are given by the co-op for volume received at the rate of one share per 1,000 gallons of milk in a scheme that has been in operation since 2,000 among the 3,200 members of the co-operative.
"Some farmers have received tax bills in excess of €25,000. Very few farmers would be able to absorb such a bill, especially in light of falling milk prices and increased costs," Fianna Fáil TD for Kerry John Brassil warned this week.
"This is a new decision by the Revenue Commissioners; one that will put many family farms at risk of failure if applied immediately," he said, adding: "In the Dáil today, I asked that the Chairperson of the Revenue Commissioners be brought before the Finance Committee to explain how this decision came about, and how it will be enforced."
"There are a number of tax questions that need to be answered by the Revenue Commissioners. Awarding preferential shares to farmers who supply milk to groups such as Kerry Group is a long standing practice, and is nothing new."
"The response from Minister Eoghan Murphy, on behalf of the Minister for Finance, today confirmed that no change with regard to the imposition of income tax or CGT to such share awards has occurred."
"If this is the case, why have the Revenue Commissioners attempted to retrospectively charge these farmers income tax on their share awards from Kerry Group?" Deputy Brassil asked. He also queried if the shares would be doubly subject to tax through capital gains when sold on in future.
"Revenue must explain how it came to this decision; why it was not communicated well in advance to farmers and milk producers and what plans they have to help farmers who are innocently affected by this tax ruling meet their tax obligations without putting their farms at risk," Deputy Brassil said.
Revenue said a number of co-ops had come to its notice for issuing 'patronage shares' in a statement to The Kerryman this week in which it also urged affected farmers to begin engaging with the process.
"It has come to the notice of Revenue that certain co-operatives have issued 'patronage shares' to members. A particular scheme has involved the issuing by the co-operative of shares to members arising from the trading relationship between the member and the co-operative...Taxpayers are invited to review their returns submitted and to avail of the qualifying disclosure facility under Revenue's Code of Practice where incorrect returns may have been submitted. The advice to taxpayers who have received a letter is to engage with us and address the issues."