Paschal Donohoe (Dublin Central, Fine Gael)

I accept that there will be consequences of the change that has been made here, but this is on foot of a very long-running issue with regard to the implementation of the flat-rate VAT system within the farming sector overall, but very specifically within the poultry sector. I am sure the Deputy is aware of the background of it, but just to give a very brief synopsis about it, an allegation was made regarding the operation of the business model in the poultry sector.

This was the subject of work by Revenue, which investigated the poultry sector and found that there could be arrangements in place which could be used to engineer excess compensation for VAT borne on input costs in that sector. This matter was examined again across a two-year period. It was found at the end of this examination that there was no evidence that these practices had changed. Regrettably, I reached the conclusion that it was important to make this change to the flat-rate system and how it operated within the poultry sector.

I met the IFA on two separate occasions to discuss this and explained why it was being done and that it happened after many years of engagement on the topic. I acknowledged at the time of the change, and when I engaged with the IFA, that this could pose difficulties. In the absence of this action, I am certain we would be standing over the operation of part of our tax code while having clear evidence that it was not being implemented in the way it was expected to be under law and that there would be consequences for this beyond the poultry sector.