Kiri

Dear Minister,

Recent disclosures—both through public studies and Freedom of Information records—reveal longstanding and systematic abuse of VAT mechanisms in Ireland’s farming industries. These abuses extend well beyond the relatively small Broiler Sector which has been in the news in recent weeks and raise serious questions about illegal state aid, ministerial oversight, and the credibility of fiscal governance within the Single Market.

A 2018 study by the Irish Tax Authority (Revenue) found that flat-rate VAT payments to Broiler farmers exceeded their input VAT costs by between 470% and 1,000%, depending on their trading structure. This disparity reflects not efficiency, but evasion—especially where fraudulent co-operatives were used to artificially inflate payment streams. Despite being informed of these findings during his term as Finance Minister, Mr. Paschal Donohoe did not act until July 2025, announcing the removal of the Broiler Sector from the Flat-Rate Addition Scheme only from September 1, 2025.

This delayed and limited intervention is deeply troubling when viewed against the wider context. Internal Revenue briefings obtained via Freedom of Information clearly state: “Abuse of flat-rate addition [fraud] happening in certain sectors. Example includes avoidance [evasion] in the poultry industry…” The plural “sectors” and the specific mention of pricing tactics used by processors are indicative of a broader problem—one that officials in both Revenue and the Department of Finance were well aware of. Yet only the Broiler Sector was excluded. This selective enforcement appears designed to placate DG Taxation while preserving systemic funding mechanisms leveraging VAT fraud for a small number of privileged processors.

Indeed, the use of VAT abuse as covert state aid aligns with strategic goals laid out in the Government’s 10-year agricultural plan of March 2000, which called for a reduction in poultry processors from 23 to 7. The forced closure of independent enterprises such as Cappoquin Poultry Plant in 2013—where I served as Managing Director and shareholder—completed this consolidation. A mechanism that was supposedly designed to simplify VAT accounting for small farmers was instead weaponised against them to serve an industrial policy.

Concerns over this practice date back to 2014, when Mr. Alo Mohan, then Chair of the IFA’s National Poultry Committee, flagged abuse to Revenue on advice from the IFA’s Chief Economist. After being marginalised and put out of business for his intervention, Mr. Mohan—with support from MEP Marian Harkin—escalated the issue to DG Taxation, which conducted a pilot investigation. The Government responded not by reforming the scheme outright, but by introducing Section 86A of the VAT Consolidation Act 2010, permitting selective exclusion of a sector where it became impossible for it to sustain systemic fraud any longer.

Even before the exclusion of the Broiler sector comes into force, farmers are being advised by the IFA that they may remain in the flat-rate scheme for other enterprises—leaving the door open for fraudulent workarounds and the perpetuation of funding models that distort fair competition. This raises fundamental questions about whether the abuse was ever intended to be meaningfully addressed.

In a democratic, rules-based Union, public officials bear a responsibility not only to uphold financial integrity, but to ensure their policies foster fair access and competition. The record of Mr. Donohoe—and that of his predecessor Mr. Michael McGrath, now Commissioner for Democracy, Justice, Rule of Law and Consumer Protection—in enabling and legitimising VAT abuse as de facto illegal state aid, should exclude them from holding positions that influence the governance of the Single Market.

I therefore respectfully urge you and your fellow Finance Ministers to consider whether Mr. Donohoe remains a suitable President for the Eurogroup.

Yours faithfully,

Raymond O’Hanlon

Director, Preferred Results Ltd

http://www.preferredresults.com/   

A business improvement and turnaround company having delivered on over 200 transformational change assignments for their Clients across industries and markets over a period of 35 years.