Vol. 372 No. 7
asked the Minister for Finance the total amount of outstanding VAT payments written off by the Revenue Commissioners during the past three years; if a decision has been taken by the Revenue Commissioners to write off VAT arrears more than three years old; if so, the reason for this; if he will instruct the Revenue Commissioners to pursue all outstanding VAT and other tax arrears; and if he will make a statement on the matter.
22.
asked the Minister for Finance the precise guidelines in operation regarding the pursuit of VAT arrears by the Revenue Commissioners; and if he will make a statement on the matter.
40.
asked the Minister for Finance if his attention has been drawn to the extreme disquiet resulting from newspaper reports to the effect that millions of pounds in VAT arrears have recently been written off by the Revenue Commissioners; and if he will make a statement on the matter.
50.
(Limerick East): asked the Minister for Finance the total amount of VAT overdue and uncollected; the steps he intends taking to ensure that all outstanding VAT is collected; and if he will make a statement on the matter.
51.
asked the Minister for Finance the notice, if any, which was given to his Department that the Revenue Commissioners has issued a circular in relation to the assessment and collection of VAT, details of which were recently published in the media; whether such circular was received, examined, considered or approved by his Department; whether there are any procedures for approval by his Department of such circulars when issued by the Revenue Commissioners; and if he will make a statement on the matter.
I propose to take Questions Nos. 8, 22, 40 and Priority Questions Nos. 50 and 51 together.
The amount of VAT tax remitted or passed as irrecoverable in the year ended 31 December 1985, the latest year for which information is available, was £378,692. The corresponding figures for the two earlier years was £222,257 in 1984 and £453,806 in 1983.
My attention has been drawn to newspaper reports concerning the alleged write-off of VAT arrears. I appreciate that this may have caused disquiet particularly among the general body of VAT taxpayers who submit their VAT returns and account for their liabilities according to the strict requirements of the law. I should like to assure the House and the general body of compliant taxpayers that there has been no writing-off of VAT arrears by the Revenue Commissioners except where the tax is formally remitted or deemed to be irrecoverable.
An internal office circular of the Revenue Commissioners has been quoted in support of the contention that there has been large-scale VAT write-offs. However, the Revenue Commissioners have advised me that the circular in question which was addressed to VAT inspectors is concerned with the system of periodic visiting of VAT taxpayers for the purpose of checking that they have correctly accounted for tax and kept proper records. The circular is aimed at securing the most efficient operation of that system.
The general scheme of visiting aims at ensuring that the bulk of taxpayers are visited on average once every three years. The circular reflects this in putting forward as a general guideline the point that the period covered by the review of past compliance by a trader should not extend further back than the current and two previous years. Since the circular provides, as it says, a general guideline inspectors may, and do if the circumstances warrant it in particular cases, extend their inquiries back beyond the two previous years and, if necessary raise estimated assessments.
I should also say that the circular referred to has no bearing on the VAT tax collection operations of the Collector-General who is the officer concerned with the formal remission or writing-off, subject to the approval of the Revenue Commissioners, and under the surveillance of the Comptroller and Auditor General and the Public Accounts Committee, of tax deemed to be irrecoverable.
The circular in question was issued by the Revenue Commissioners in exercise of their responsibilities for the care and management of VAT which is entrusted to them under the VAT Acts. It was not received in or considered by the Department of Finance and there was no obligation on the Revenue Commissioners to consult that Department on what was purely an administrative matter.
The latest information in relation to the amount of VAT outstanding is contained in pages XIX to XXI of the report of the Comptroller and Auditor General on the 1985 Appropriation Accounts, a copy of which is in the Library.
I am satisfied that the Revenue Commissioners are pursuing arrears of VAT with a view to collection. In this connection the Revenue Commissioners have informed me that the recent appointment of twelve new revenue sheriffs will make an important contribution towards achieving the objective of collecting such arrears.
In replying the Minister referred to a circular issued by the Revenue Commissioners. Can he indicate when that circular was issued and whether the VAT inspectors operated the guidelines outlined in that circular on a verbal basis prior to its formal issuance? Might I ask also if, in that circular, it was indicated to tax officials or VAT inspectors that if they felt amounts of VAT were not recoverable they should not be entered as an estimate? Could he indicate to what extent that practice was pursued, in other words, to what extent VAT was written off before being listed as arrears?
The circular was issued in late April of this year. I have a copy of it here which I can make available to the Deputy.
April 1987?
I can make a copy available to the Deputy.
The Workers' Party have it already.
When was it issued to The Workers' Party?
There was a previous circular issued in February 1985. Briefly what is contained in the circular is a reiteration of what is, in effect, Revenue policy in regard to collection. I might point out to the Deputy that the actual figures passed as irrecoverable are very low in the overall context of VAT receipts. Over the past few years we are talking of figures that have not shown much change and have averaged approximately £350,000. There is nothing extraordinary about it. It is in the exercise of the Revenue Commissioners' discretion — with a view to collecting the maximum tax that they see as being collectable — that matters of this kind arise and decisions are taken by them. There is nothing extraordinary about it. There has been no change or distortion in the overall collection figures or in the amounts remitted. As I said earlier, responsibility lies entirely with the Revenue Commissioners, as a legal statutory body separate from the Department of Finance and from political control.
I wish to bring in Deputies who have tabled questions in respect of this matter in the order in which they were tabled to me. Deputy Richard Bruton.
Does the fact that sums that were deemed to be realistically irrecoverable are not being entered as estimates not mean that the system the Dáil has for vetting the write-off of tax arrears, namely the submission to the Comptroller and Auditor General of such amounts for vetting, is being by-passed? Does it not equally mean that the operation of the guidelines contained in this circular leads to the Dáil's control over this issue not being properly executed?
Technically or legalistically the Deputy could have a point. But on the ground the Revenue Commissioners are faced with the practical reality of collecting revenue as expeditiously as possible so as to provide a cash flow for the State. When one considers the matter in that business-like manner one sees that the amount involved is very small compared with the total revenue collection from VAT which has not varied. One must give the Revenue Commissioners a business-like, sensible or pragmatic — call it what you will — discretion in the day-to-day exercise of their functions to deem certain outstanding accounts irrecoverable if, in the process of so doing, they are able to collect some percentage of the moneys in some practical way. That is the way the system operates. I think everybody in the House is aware of that. It has operated like that since the foundation of the State and, indeed, operates in every State in that manner.
While accepting that the Revenue Commissioners must be given discretion, would the Minister agree that they operate under provisions of Acts passed by both Houses of the Oireachtas? Therefore, surely it is the responsibility of the Minister for Finance to see to it that the administration of the provisions of these Acts is done in a manner that is seen to be fair to everybody? Generally the complaints one hears are that, as a result of practices by the Revenue Commissioners, a certain portion of the community is hounded for taxes and checked on regularly, people who are in fact up-to-date in payment of taxes. It appears to be suggested that, in order to comply with circulars issued, inspectors are doing their job by making a certain number of calls whereas other taxpayers get away scot free. Therefore, it is not good enough to say that it is not the responsibility of the Minister for Finance, because through him——
This is becoming a very long question. Might I dissuade the Deputy from putting questions in omnibus form?
——is the only way we can ask that the Revenue Commissioners apply the laws passed by these Houses.
The Deputy must bring his question to a conclusion.
Would the Minister ensure that the Revenue Commissioners see to it that inspectors play fair in relation to checking on all VAT clients rather than concentrating on a limited few?
I will certainly take up the matter with the Revenue Commissioners. I am sure the House will appreciate that it would be very wrong to impede them in the effective collection of revenue. If, on occasion, in an inevitable situation they have to compromise in order to secure some collection of revenue they have to have discretion to do so. I will take up with my colleague the point the Deputy has made.
(Limerick East): The first priority Question, No. 50, is in my name and asks if the Minister would inform the House the total amount of VAT overdue and uncollected. The Minister has not informed the House of the total amount of VAT overdue and uncollected. Has he that information in his brief?
I have a percentage here — that the amounts involved in the last year for which records are available, that is 1985, represent less than 0.1 per cent of the actual VAT yield.
(Limerick East): I do not think that is the relevant statistic. We have got figures and amounts in respect of the amount of VAT waived but that is not what I asked. The Revenue Commissioners have this information readily to hand on a computer key. How much VAT is outstanding and uncollected? Why are we not being given that figure?
I can give the Deputy the latest figure I have in regard to VAT, that is, that at the end of May 1986 there was a balance outstanding of approximately £717 million, of which the Revenue Commissioners estimate that £166 million is likely to be collected. Therefore, there is outstanding £717 million, mostly estimated amounts, of which it is hoped to collect £166 million.
(Limerick East): There appears to be £550 million in VAT outstanding which the Revenue have no expectation of collecting. Is that because——
That is because of liquidations caused by the last Government, by the way, if the Deputy wants some answer.
(Limerick East): The Minister will not bustle his way out of this. We should have more information rather than argument. Is the £700 million plus an estimate by the Revenue Commissioners of what is outstanding or is it the actual amount they are trying to collect and are unable to do so?
That is the amount outstanding and it relates largely to companies that were forced into liquidation by the economic policies of the previous Government. Out of that we hope to rescue £166 million.
Is that in the brief?
That is in the brief.
The Minister was shy about reading it out the first time.
There are other Deputies who wish to speak.
(Limerick East): The Minister is trying to bustle his way out of answering the question. I am looking for information.
The Deputy is getting it.
(Limerick East): There is £700 million plus outstanding. The Revenue Commissioners hope to collect £160 million. How far back does that go; is the Minister talking about the last three years or the last five years?
That is the position that obtained as of end May 1986.
That is all arrears?
Yes.
(Limerick East): Have the Revenue Commissioners or the Minister any plans whatsoever to collect the £700 million that is outstanding?
The Revenue Commissioners, assiduous as they are, will pursue that to the fullest extent but when companies have been pushed into liquidation by the economic decline of the past four years there is very little the Revenue Commissioners can do about it.
I want to bring in Deputy McDowell who also tabled a question on this matter.
That money was collected on behalf of the State; it has nothing to do with liquidation.
Deputy Noonan was in office for four years and what did he do about it?
I have called Deputy McDowell.
If as it now transpires, there is £551 million which is irrecoverable which the Revenue Commissioners have thrown their hats at, are the Department of Finance in any sense made aware of the decisions which are made by the Revenue Commissioners as to whether any class of outstanding debt is to be written off? Is there any process whatsoever whereby the Revenue Commissioners send to the Department of Finance in a buff envelope with a harp on it if necessary a copy of any regulations which they make? Is there any discussion between the Department of Finance and the Revenue Commissioners as to the implications of any circular? If there are no such discussions or procedures in existence will the Minister give the House an assurance now that those kind of procedures will be established and that the Department of Finance will take responsibility for the cash flow decisions which are being made in the name of the taxpayers?
That is the point I was making.
The Deputy is extending his question.
That is a very constructive approach and I will certainly bring to the notice of my colleague that it would be appropriate that some internal discussion should take place so that proposals can be made as to how best to effect recovery. From the information I have, basically we are talking about totally irrecoverable VAT debts. That arises from a period of economic recession that has been generated by the economic policies pursued by the previous Government in the past four years.
It has nothing to do with that.
I put down a priority question.
The Deputy has been allowed a long supplementary question.
The Minister indicated he thinks my idea is a good one. Why should we wait for some departmental or Revenue Commissioners' reports to debate this matter? Why does it require this kind of illegal activity to make the Minister for Finance come to his senses and realise he is responsible for this?
It shows the power of parliamentary debate and the power of a parliamentary question.
In view of the fact that value added tax is a European institution which was never known in this country until we joined the European Communities in 1973, does the Minister not think it right that either his colleague, the Minister for Finance, and his Department or the Revenue Commissioners or, better still, both would have sets of comparative figures which would enable us to form some idea in our minds as to whether that degree of uncollected tax is normal by European standards or by standards of other countries which are also in recession or whether it is abnormal and, if so, how abnormal is it? I appreciate the Minister may not have that information in a file in front of him but will he take an early opportunity to make public comparative figures from other European countries so that we can see whether we are, as usual, at the bottom of the pile or whether we can, as I do not believe is the case, look the other member states in the eye and say that our revenue collection system is no worse than theirs?
I will bring that observation to the notice of my colleague because it is worthy of further investigation and we will try to establish the relative position vis-à-vis other European countries.
I appreciate there have been many supplementary questions in relation to this matter but at least four questions have been taken together. Can I ask the Minister if——
We have dwelt a long time on this question, Deputy.
There is a lot of money involved. Is the Minister, on behalf of the Minister for Finance, prepared to give an undertaking to this House in view of the disquiet that has been raised, that moneys that remain outstanding, moneys which are still owed by people who are still in trade, whether as sole traders, as partners or as companies, will be considered redeemable and will be considered as a continued debt and that those people will not be allowed to wipe the slate clean in respect of those moneys and recommence trading again?
It is certainly a matter that the Revenue Commissioners should follow up in a very assiduous sense. I share the Deputy's concern that that should be done and I will bring it to the notice of my colleague.
In the light of figures disclosed here today, will the Minister accept that there are grounds for implementing some of the recommendations which have been made in relation to the operations of the Revenue Commissioners? Will he accept that the figures suggest all is not totally well and that there is need for a reform of the procedures? Is he aware there are certain reports into the operations of the Revenue Commissioners and will he accept, as a matter of priority, that these recommendations should be implemented at this stage?
The Fine Gael Party should get their act in order because Deputy Barrett said the reverse a few minutes ago. He thinks the Revenue Commissioners are harassing people too much and Deputy O'Keeffe thinks they are not harassing people enough.
The Minister misinterpreted what I said. I said some people are being harassed and others get away scot free.
I am calling Deputy Desmond.
Can I have a reply to the question I asked?
I have no control over replies, Deputy.
Is the Minister refusing to answer my question?
The Deputy is not listening.
Will the Minister inform the House, if he has the information available, the number of undertakings involved in relation to the recoverable amounts of tax and if he has the balances readily available for recent years?
I have not the number of undertakings. The only information I have is the overall sum which I mentioned.
Does he have the overall sum for recent years? Has there been any decline in the recoverable amounts?
I have the accumulated figures only.
Is there an accumulated account for 1986?
The figure I gave the Deputy is for 1985 and that is the latest figure.
There is an accumulated account. May I ask the Minister does he have the accumulated account for recent years?
No. That is the latest total accumulated figure I have available to me.
Is there an accumulated account for 1986?
I can get that information for the Deputy.
The Minister should have it readily available——
I have not got it.
The Minister should have the information. He is here to answer questions.
I would like to help the Deputy in every respect because he is an excellent Deputy.
He appears to be so, having witnessed the actions of the present Minister for Health.
He is an excellent Deputy.
He was also an excellent Minister.
I think we could say the same for the Deputy Minister for Finance.
