Victor Boyhan (Independent)
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I welcome the Minister of State at the Department of Finance, Deputy Sean Fleming, to the House.

Jerry Buttimer (Fine Gael)
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I welcome the Minister of State. Irish Community Air Ambulance, formerly known as Irish Community Rapid Response, was formed in Rathcoole in north Cork 23 months ago. In that time, it has been tasked close to 1,000 times by the National Ambulance Service. In 2020, it was tasked 490 times and so far in 2021, it has been tasked 225 times. This exemplifies the range of services the organisation provides and the dedication of its crew and the staff. The number of tasks in which Irish Community Air Ambulance has engaged has increased by 20% and these tasks include an increased number of farming-related incidents. Each task costs €3,500, which clearly represents value for money, saves many lives and ensures people are transported for treatment quickly.

Irish Community Air Ambulance leases its helicopters from Sloane Helicopters, a company based in the United Kingdom. In June, Sloane Helicopters will set up a company to enable it to continue operating in Ireland as a result of Brexit. The new company will operate under an Irish airline operating certificate, AOC, and Irish Community Air Ambulance will then lease helicopters from the new Irish entity. As a result of this new arrangement, Irish Community Air Ambulance will be charged VAT on its payments to Sloane Ireland. It also pays VAT on the fuel used to power its helicopter emergency medical service, HEMS, aircraft.I have been in contact with the chief executive, Michael Sheridan, who has met with Oireachtas representatives and spoken to us individually. I am advised that the charity will be pay €320,000 in VAT in a full calendar year based on its current levels of service. Should it provide an additional air ambulance base in the future in support of the National Ambulance Service it would expect to pay in excess of €640,000 in VAT in a full calendar year to provide our rural and urban communities with a vital lifesaving service. This will represent a significant cost for the charity, providing a vital service in support of the National Ambulance Service, as it is only a partial VAT recovery due to its charitable status, as the Minister of State knows. This VAT bill could instead be used by the charity to fund an additional 92 lifesaving missions each year.

The primary reason for my Commencement motion this morning is that the existing VAT relief scheme under section 103 of the Value Added Tax Consolidation Act 2010 should be looked at and reviewed. In 2013, the former Minister, Michael Noonan, brought in a statutory instrument that provided that inshore aircraft be repaid any, "borne or paid tax in relation to— (a) the supply or hire to it, (b) the intra-Community acquisition or importation by it, or (c) the repair, modification or maintenance for it".

I appreciate, and I am sure the Minister of State does, the difficulty for Irish Community Air Ambulance in raising funds in this pandemic but also it is doing lifesaving work. The additional VAT costs will place an additional and significant burden on it in terms of fundraising that would not appear to be an equitable outcome, given that an exemption is in place for sea rescue craft. I am not creating a competition or adversarial situation. I am asking that we provide an equitable playing field to a charity that is providing huge service. Irish Community Air Ambulance has benefited each community by its inception, work and the manner of its work. I hope the Minister of State and the Government will look favourably on the request.

Seán Fleming (Laois-Offaly, Fianna Fail)
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I thank the Senator for raising this topic. He has given us some detailed information which I would not have been privy to on the amount of VAT that is paid by Irish Community Air Ambulance in a full year. The Senator has mentioned the issues of VAT on leasing and VAT on fuel. Most people, not just in the Cork and Munster areas but right through Leinster and several other regions in the country, appreciate and acknowledge the work being carried out by many volunteers and by people involved with the Irish Community Air Ambulance service. It has been directly responsible for getting so many people from so many situations to hospitals. I understand why the Senator is raising the issue of its VAT bill.

Section 103 of the Value Added Tax Consolidation Act 2010 deals with ministerial refund orders and authorises the Minister for Finance to order repayment of tax in certain circumstances which are set out in regulations. Rather than amending the Minister's power, the Senator's intent may have been to propose amending the VAT regulations, which would have been the Value Added Tax (Refund of Tax) (Rescue Boats and Related Equipment) Order 2013, SI 249 of 2013, which the Senator may have referred to in his opening contribution.

The refund order is in place in accordance with the EU VAT directive, which allows for historic VAT treatment to be maintained under certain conditions. Ireland has maintained this relieving provision, which provides for a refund of VAT on the cost in respect of small rescue boats and ancillary equipment to Irish Water or other qualifying groups. That is an historic situation that was always in place over many decades. The purpose of those regulations the Minister introduced was to facilitate and copper-fasten the VAT situation and their treatment under the VAT regulations in respect of those bodies that were historically in operation at that time. However, it did not cover any new operation that would be coming in subsequently.

Unfortunately, there is no scope under the EU VAT directive to introduce or amend the refund order to include the provision of aeromedical services. Similarly, there is no provision in either European law or Irish VAT law to allow a zero rating or exemption for supplies of this nature. It is important to remember that VAT legislation in Ireland as set out in the Value Added Tax Consolidation Act 2010 must comply with EU directives.There is no scope in the EU VAT directive to exempt supplies on the basis of charitable status. In recognition of the issue, which affects charities across the country, the Minister for Finance introduced a VAT compensation scheme for charities in budget 2018 to relieve the VAT burden on charities and to partially compensate them for the VAT they incur on expenditure related to income raised independently. The scheme applies to VAT incurred on expenditure on or after 1 January 2018 and is paid one year in arrears. The conditions under which it is possible to qualify for repayment under this scheme are outlined on the website of the Revenue Commissioners. Where the total eligible amount of claims from all charities exceeds the capped amount, which is currently €5 million, claims are paid on a pro ratabasis. This is a relatively new scheme, which has been in place and operating only since its introduction in 2018, and the first refunds were paid under the scheme in 2019. It continues to operate and is being reviewed now. I will respond with more detail regarding this scheme during my second intervention concerning this matter.

Jerry Buttimer (Fine Gael)
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I thank the Minister of State for his reply. I am happy to work with him and colleagues from across the Houses, and especially with Deputies Creed and Moynihan, in respect of the Irish Community Air Ambulance organisation. The fundamental issue here is the €320,000 in VAT being paid by a charitable body to the State, when the organisation in question is tasked with being called out at all hours. Last Friday, we debated the Acting Chair's motion on search and rescue services. This Commencement matter is also about search and rescue and concerns an organisation which saves lives and brings people for care and treatment. The Irish Community Air Ambulance was called out 490 times in 2020 and 225 times this year so far, and that gives us an indication of the level of activity of the organisation. I hope we can find a means and a mechanism to do something about this situation. I appreciate that the hands of the Minister of State are tied, but I hope we can be creative in this regard.

Seán Fleming (Laois-Offaly, Fianna Fail)
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Senator Buttimer will be aware that this issue is a budgetary matter and, as such, can only be dealt with at budget time. It is important that this matter is raised, however, but I am not offering any golden solution to this issue on budget day. The scheme introduced just two years ago, however, was capped at just €5 million. For the Senator's information, a review of that scheme is being undertaken by the Department of Finance, the Revenue Commissioners and the charities sector and a report will be published in June or July. Therefore, it will be possible to discuss this issue well in advance of the budget in the autumn.

To give an indication of how things stand, requests for repayment submitted during the two years in which the scheme has been operating were in the region of €44 million to €46 million, but only €5 million was available under the scheme to meet those requests, which represented only about 12% to 14% of the VAT paid. It is good to put that information on the public record. We do not have information regarding last year's claims because people have until the end of June to submit them. I ask the Senator to watch out for the report on this scheme coming out this summer so that we can debate the matter well in advance of the forthcoming budget.