Willie Penrose (Longford-Westmeath, Labour)
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128. To ask the Minister for Finance the reason his Department did not pursue positive steps to ensure that the clause of the VAT system engaged by penalty processors was immediately halted, in the context of the recent release of documents to a media organisation (details supplied) which confirmed that the Revenue Commissioners briefed his Department regarding their concerns in January 2016; if his attention has been drawn to the fact that a prominent poultry farmer who refused to participate in the scheme has been effectively closed down with the total loss of business; when the anti-avoidance measures to deal with this issued in budget 2016 will be implemented; and if he will make a statement on the matter. [7735/17]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by Revenue that taxpayers are entitled to structure their businesses and undertake their business activities in the most tax efficient manner permitted by the law. However, where such structures and activities result in an outcome not intended by the legislation, Revenue will raise the issue with this Department and propose a legislative change to neutralise or limit such an outcome if one is possible.

In the context of Finance Bill 2016, Revenue drew to the attention of my Department that the interaction of the flat rate scheme for farmers and the normal VAT system was being exploited in a particular agricultural sector to achieve overcompensation for flat rate farmers on their VAT input costs. As a result, as the Deputy is aware, I introduced a provision in Finance Act 2016 that enables me to exclude by Ministerial Order any specified agricultural sector where the business structures or models employed result in a systematic excess of flat-rate addition payments over input costs borne by flat-rate farmers within that sector.