FDC GROUP: All you needed to know about reclaiming Vat on expenditure

AS most farmers are not registered for Vat, then they are entitled to reclaim Vat on certain expenditure. 

This would include the construction, extension, alteration or reconstruction of: farm buildings and structures; land drainage; land reclamation; hedgerows; underpasses; fixed equipment; water troughs and piping, and gates and barriers.

The Vat application is completed on a Vat 58 form and previously this could be simply completed in paper format and there could be up to four years’ invoices put together to make a claim. 

Once the claim exceeded €125, then Revenue would refund the Vat in a cheque. 

Revenue have changed their system in 2019 so now all claims have to be submitted online unless you obtain permission from them to send it in manually by post. 

This is only granted in very limited circumstances, namely where a farmer has been granted an exemption from filing returns and payments.

The farmer can register with Revenue online and file this Vat refund claim themselves or they can instruct their agents to file it on their behalf.

The claim can be submitted at any time provided they are: no older than four years; for a tax year or a period within a tax year; the tax year runs from January 1st to December 31st, and you cannot submit a claim that covers two calendar years, and the claim is greater than €125.

The claim needs to be completed online and your bank details also need to be submitted as Revenue will only repay the Vat refund by electronic funds transfer.

The claim has to be accompanied by scanned copies of all the invoices along with all the invoices numbers completed online so it can be checked if an invoice is submitted twice for Vat repayment.

It is very important that the original invoice is from the time of purchase and retained because if you lose it, and have to get it reprinted, then it will have ‘reprint’ stamped on it and Revenue will not repay the Vat. 

It is also important to remember that Vat is not refundable on repairs to farm buildings, structures and farm roadways, outlay on roadways to dwelling houses, mobile equipment, repair, service and maintenance of equipment and machinery.

You can submit as many claims as you want in a year once it meets the criteria above.

So it is important to bear this in mind if you are completing a large expenditure in relation to something like land reclamation or the construction of a slatted shed or a milking parlour, that you can reclaim the Vat as soon as you have paid the invoice. 

You do not have to wait until the total job is completed to submit your claim, this will help greatly with cashflow as when you get your Vat refund back it will help to pay for the next stage of the construction project.

The processing of the claim can typically take anything from two to six weeks depending on the size of the claim and when it is submitted.

 Typically, when people are completing their tax returns around the  tax deadline time in October this results in a larger number of Vat refund claims being submitted also and this will inevitably slow down the refunds being processed. 

So, it is best to submit these claims as early in the year as possible if the refund is required urgently.

•  Philip Salter is an accountant at FDC in Skibbereen.