Vol. 337 No. 2
I move:
That section 14 (inserted by the Value-Added Tax (Amendment) Act, 1978 (No. 34 of 1978)) of the ValueAdded Tax Act, 1972 (No. 22 of 1972), be amended by the insertion in subsection (1) (b) after "of taxable services" of "(including services which, if they were supplied in such taxable period, would be taxable services).
Perhaps the Minister would explain this resolution.
The resolution relates to the official Committee Stage amendment, No. 101A, of section 14 of the VAT Act dealing with the cash receipts basis of accounting for VAT. Under the cash receipts system a registered person may pay VAT in the usual two-monthly taxable period by reference to the cash received in that period irrespective of when the goods or services to which the cash refers were supplied. Under the usual system the trader pays VAT by reference to the value of goods or services supplied in a particular taxable period irrespective of when payment for the goods is received. The proposed amendment will remove any doubt about the applicability of VAT under the cash receipts system to services which, although taxable in the taxable period when the tax is being raised, were exempt from tax at the time they were supplied.
Is this a reference to the fact that a number of professional services which have been exempt from VAT are now being brought within the net?
Yes.
Did the Minister say that?
I said that it relates to amendment No. 101A of section 14 of the VAT Act.
I would have preferred if the Minister's explanation had been shorter on gobbledegook and longer on information.
I was trying to explain the difference between the two systems, the cash system and the usual system.
I presume there is no retrospective element in this and that VAT will not be levied on services provided before the date on which they were brought within the net. What is the date on which these services become VATable? I would have thought that would have been 1 March. If I am right on that, what would be the position concerning an appearance in court on 26 February in respect of which payment is made after 1 March for the services rendered?
There is the option whereby people can choose the cash receipts system. The operative date is 1 September this year. If the barristers, solicitors and so on opt for the cash receipts basis, any cash they receive as and from 1 September, though it might be in respect of services rendered prior to that date, will be liable for VAT.
So it is for them to decide which system to use, but what is the point of giving them an option?
That option exists for all people so it is merely continuing it for these other services. The proposed amendment is to remove any doubt about the applicability of that under the cash receipts system.
In the case of one opting for the cash receipts system, is the option reversible and, if so, at what sort of notice?
It is reversible on foot of notice from the beginning of the next taxable period.
I presume that the bulk of the people concerned will have an incentive not to opt for a cash receipts basis in the first year given that they would save themselves some money in that way and that they would not have to pay on the other system for services rendered prior to 1 September.
The choice will be theirs.
Can the Minister indicate the latest estimate of the revenue likely to accrue from bringing these services into the VAT system both for this year and for next year? Also, perhaps he would indicate briefly the services that are involved and if there are any remaining services that we have the option of bringing within the VAT net, within EEC rules, but which we have not yet decided to bring in.
Included are accountants, rent and debt collectors, solicitors and barristers. The revenue for this year is estimated at £1.2 million and for a full year it is estimated at £7,500,000.
I presume that the Minister has had discussions with the relevant professional bodies about the method of collection and that a suitable arrangement has been agreed.
Discussions have taken place between the Revenue Commissioners and the various bodies concerned.
I presume that the system will be one whereby it will be possible to ensure that people cannot evade their tax liability by accepting payments in cash in addition to the official payment by cheque which presumably they would receive. In other words, that they cannot have one official receipt and another receipt which is unofficial in respect of an amount levied in cash and which is over and above the amount appearing on the official receipt. A large number of the people who will be availing of the services of these professional bodies will not be registered for VAT and, consequently, there will be no question of their claiming VAT back. To put it another way, their records will not be coming back to the Revenue Commissioners by way of another person claiming VAT refunds on the payment made to the professional person. In respect of these ordinary people who will be using the services of these lawyers, what provision will there be to prevent evasion by reason of the professional person seeking a cash payment in addition to the official fee?
That situation would be subject to the normal conditions.
What are they?
There is a whole series of them under the various Tax Acts. In this case they will be exactly the same as those in respect of income tax but these conditions are not an issue in this Bill. They are on the Statute Book.
Is the Minister satisfied that there will be no room for evasion?
We will always move to stamp out any activity associated with evasion in this case just as in the case of income tax.
