FAO: Commission Chairman (Mr. Frank
Daly)
There is a significant Vat anomaly
in Irish tax law, which has recently become apparent to me in the running of my
business. This anomaly has intensified in the last 2 to 3 years, due to the
acceleration of Capital Spend on astroturf facilities by Government & its
Agencies in recent years.
Private Sector Vat
Position:
We are one of the very few operators
of 5-a-side soccer pitch facilities in
Public & Non-Profit Sector
Position:
These are all Vat exempt, which
means that they neither claim nor charge vat on inputs. They will argue that
they do not claim vat on Capital Spend, but given that land to them is generally
free or near free, that assets purchased are largely Grant Aided, and that they
gave preferential commercial rates treatment, this argument holds no water. We
have to compete against these entities, but where we have to fund Vat, Finance,
Depreciation & Rent/Rates, they very often do not, of if they do, to much
lower levels than we do.
Difficulties:
1.
We have been crucified in recent
years with a proliferation of Government, Local Authority or Lotto funded
astroturf facilities, which have been grant-aided with little regard to supply
or demand issues or any other commercial basis.
2.
We have no difficulty with
competition, but when State sponsored competition is operating on a different
basis to private sector competition, this has the effect of putting massive
pressure on our business.
3.
We charge €70 per peak pitch hour
(€50, €45, €35 & €30 for off-peak) but have to remit Vat @ 13.5%, and our
prices are comparable with market rates in the
Gross
Vat
Net
Revenue
13.5%
Revenue
Non-Profit Sector Peak Hourly Rate (higher price range)
€60
0
€60
Non-Profit Sector Peak Hourly Rate (lower price range)
€50
0
€50
4.
As if this was not bad enough, we
also have private sector competition, who operate a web based business, and they
are able to buy astroturf pitches at discounted prices from these non-profit
entities for approx €40 per peak pitch hour, and can then use this non-profit
pricing to compete against us on our league business, based on uncompetitive
pricing.
5.
These factors have served to
undermine our business model, and has served to threaten our business model
going forward, particularly in these extremely difficult times. This issue has
intensified as an issue within the last number of months, to the point where it
is becoming almost unbearable.
I understand that the Commission on
Taxation has been sitting since Feb 08, though I must admit I was unaware of
same. I would have to believe that the Commission is now being forced to look at
a whole new tax agenda given recent economic circumstances, and I assume that
they have sought and are allowing new submissions, based on these vastly changed
circumstances. I now know that submissions were due by 23/5/08, but given the
circumstances, I would hope that you can accept this submission, as for my
business, this is now a critical issue.
I can, if you wish, provide some
evidence of what I am talking about, with price comparisons between ourselves
and others in our sector, and indeed with more relevant information. I can also
make myself available to meet with you at your
convenience.
I have no desire to threaten the Vat
Exempt nature of non-profit entities, but I cannot be expected to operate in the
same sector, against entities that have both a 13.5% Vat advantage, and a cost
base advantage based on the Grant Aided nature of their business (lower finance,
depreciation, rent, rates costs & Vat Exempt). One solution that would not
impact the Non-Profit Sector would be to allow private sector astroturf pitch
operators like ourselves (of which there are barely a handful) to become Zero
Rated for Vat. It would not be helpful to make it Vat Exempt, as this would make
it difficult to operate profitably due to the high Capital Spend nature of the
business model, and the high level of P&L costs which are vatable. I would
argue that Vat tax law in this regard is anti-competitive in nature, and I must
act now, for not to act may threaten the viability of my
business.
I would be most grateful if you
could consider this document, and revert.
Regards
James
Coghlan
086 2610493
Astropark Head Office,