Walsh denies VAT threat to farmers selling him wool

The main Irish buyer of Scottish wool last night strongly denied concerns from both NFU Scotland and its counterpart in England that sheep farmers selling to him might be liable to pay VAT if the wool did not leave Scotland within three months of the sale.

Aidan Walsh, whose Texacloth business has been buying wool in Scotland for 20 years, said that all sheep farmers selling to him normally received a settlement voucher which covered all the requirements of Customs and Excise who operate the VAT scheme.

He claimed this documentation was similar to that used in mainland Europe when he bought wool there. And he stated that it was the first time he had heard of the rule requiring the wool to leave these shores within three months of the transaction being recorded.

Walsh stated categorically: “We do our business legally and above board.”

This year he had bought more wool than ever in Scotland and he said most had been shipped to China within a week of purchase.

He blamed the British Wool Marketing Board and its previous chairman for raising the issue, saying they were just trying to “make their presence felt by scaremongering”.

However, a spokesman for NFU Scotland said that, following information they had received from the English NFU, it was important that Scottish farmers selling to Irish buyers checked that the wool was going to leave the country.

“Texacloth operates a number of depots in Scotland including Huntly, Galashiels, Muirkirk, Perth and Lairg and those sheep farmers supplying the firm may need to ascertain for VAT purposes whether the wool supplied is destined for Ireland or whether it remains in Scotland for use within the UK,” it said.

When the wool is shipped to Ireland within three months the sale is zero rated for VAT but if the wool does not leave the UK at all, farmers must charge and account for VAT on the sale as it is a domestic UK transaction.