Tuesday, 25 September 2018
Department of Finance
I am advised by the Revenue Commissioners that in accordance with the EU VAT Directive farmers may register for VAT or be treated as flat-rate farmers for VAT purposes. Farmers who elect to register for VAT have an entitlement to reclaim VAT on costs incurred in relation to the farm business or they can remain unregistered and opt for the flat-rate scheme which is designed to reduce the administrative burden for farmers and to compensate them for the VAT borne on the purchases of goods and services relating to their activities.
The Value Added Tax (Refund of Tax) (No 25) Order, 1993 provides for a refund of VAT incurred by unregistered farmers in the “construction, extension, alteration or reconstruction of any building or structure which is designed for use solely or mainly in his or her farming business”. The installation of security lighting would not of itself qualify for a refund of VAT under this Order but would qualify where it is a constituent element of qualifying construction work undertaken by an unregistered farmer. Each claim for a refund of VAT under this Order is evaluated on its merits.
I am further advised by Revenue that a farmer would be entitled to write off the cost of installing security lighting against his/her farming income as it would qualify for capital allowances. The cost may be written off over 8 years.
Where, however, a farmer does not have an entitlement to capital allowances e.g. s/he may be retired and no longer trading, relief may be available under the Home Renovation Initiative (HRI). This provides income tax relief in the amount of 13.5% of the cost of certain repairs, renovations and improvements, carried out on a person's main residence. The installation of security equipment such as security lighting comes within the terms of the Incentive. It should, however, be noted that as relief under HRI is restricted to works carried out on a residence, the installation of security lighting to protect an out-building, or other non-residential part of a farm, would not qualify.
The relief is granted by way of a credit against income tax over the two years following the year in which the works are paid for. 50% of the relief is given in each year. The key features of the scheme are that:-
- The works must be carried our by a tax compliant contractor;
- The works must be carried prior to 31 December 2018;
- Local Property Tax payments must be up to date in respect of the property;
- The cost of the works must be greater than €4,405 and not more than €30,000 (both figures exclusive of Value Added Tax). The cost of multiple works by different contractors may be aggregated in a claim.
Full details of the scheme are available on the Revenue website at: .