Mr. Niall Cody:

The statutory instrument that gives effect to it. We have a VAT system based on EU law. Every farmer is entitled to register for VAT. If farmers register for VAT, they are entitled to deduct all farm expenditure. For unregistered farmers, there is what is known as a flat-rate scheme, where there is a flat-rate addition on sales by unregistered farmers. The purpose of the flat-rate scheme is to compensate farmers for VAT incurred in the course of their business. It is an aggregate amount across the full sector. The VAT 58 scheme was brought in in 1972 to reflect the fact that farmers at that stage were putting up hay barns or slatted sheds. I watched the agriculture committee with interest. It reminded me of when I was an outdoor officer in the Waterford tax office, when I went out and did checks on farm construction or fencing. There were no robotics and no automatic scrapers. The calf feeding process was somebody with a bucket.

The order and the legislation go back to that era. During the period of expansion of dairy farms, which involved the construction of milking parlours and the installation of milking machines and bulk tanks, all the expenditure that was entailed as part of the development of a dairy operation tended to be allowed. However, we see now that bulk tanks are being replaced with new ones. That does not come under construction or reconstruction.