I move:
That section 9 of the Finance Act, 1968 (No. 33 of 1968), be amended by the substitution for paragraph (b) of the following paragraph:
"(b) to tax recoverable by virtue of a notice under section 8 served after the 15th day of January, 1975, as if the tax were tax which the person was liable under the regulations to remit for the last income tax month of the year of assessment to which the notice relates.".
This resolution anticipates provisions in the Finance Bill concerned with the charging of interest on PAYE tax still due from employers after the end of the income tax year.
The effect is to ensure that in cases where it is necessary to serve formal notices of estimates of amounts due, interest will become payable with effect from nine days after the end of the income tax year to which the underpayment relates. This is achieved by treating the amount of tax found to be underpaid as if it were tax payable for the last month of the income tax year concerned, that is, the month ending on the 5th April. The new provision will apply as respects notices issued after the 15th January, 1975.
Under present law, interest on tax recoverable under such notices of estimates become chargeable only with effect from the end of the income tax month during which the period of 14 days after the service of the relevant notice expires or, if an appeal is lodged, from the end of the income tax month in which the period of 14 days after determination of the appeal expires.
The Estimates which are the subject of this resolution arise after the end-of-year review of employers' PAYE operations. This review takes place following the lodgment of the annual PAYE return which employers are required to make at the end of the year of assessment. When an examination of such a return shows that tax was underpaid and the employer agrees the amount underpaid without the necessity of enforcement action he is liable for the amount of tax due and interest thereon calculated from the relevant month or months to which the underpayment relates.
Where there is no agreement and it is necessary to make a formal estimate and the appeal procedure is availed of, interest does not commence to apply until after determination of the appeal. Since in this type of case the employer is likely to have caused the maximum delay in lodging his return in the first place it is clear that in the case of unco-operative taxpayers there can be substantial delay which can run to six months or 12 months before the underpayment is formally determined and interest commences to apply to it. The provision is being abused by some employers for the purpose of holding over tax due without having to pay interest on it.
