Dáil Éireann debate -
Thursday, 1 Nov 1990

Vol. 402 No. 4

Written Answers. - Tax Queries Delay.

Roger T. Garland

Question:

23 Mr. Garland asked the Minister for Finance if his attention has been drawn to the fact that the Dublin tax district which deals with non-PAYE taxpayers is six months behind with the processing of queries arising out of assessments raised in the tax year 1989-90; the reason for this delay; if he will outline the action he intends to take to rectify this situation; and if he will make a statement on the matter.

Minister for Finance (Mr. A. Reynolds)

Practically all tax returns for 1989-90 have been processed by this time. Dublin tax district has been under considerable pressure in dealing with correspondence resulting from the processing of these returns. These difficulties are not matched in any other district. Most country districts are effectively up to date, with small manageable levels of correspondence in others.

The large volume of correspondence has arisen primarily due to the system of assessment which applied for years of assessment up to and including 1989-90. Under this system some incomes, e.g. trades, were assessable on the basis of income of the year preceding the year of assessment while other sources, e.g. dividend incomes, were assessable on the basis of the income of the year of assessment. This mixed basis of assessment resulted in two years returns being necessary to finalise the liability for one year for a significant number of taxpayers. Accordingly, the processing of the 1989-90 tax returns resulted in revised assessments for 1988-89 as well as assessments for 1989-90 in a large number of cases.

The transition to self-assessment has itself generated an increase in the overall level of correspondence coming into districts. This is to be expected in the early stages as practitioners and taxpayers become accustomed to the new arrangements but is not expected to be a significant long term factor.

The problem of the two years' returns being necessary to finalise liability for one year was addressed in Chapter II of this year's Finance Act. Under this, the basis of assessment has been changed so that one return will determine the liability for a year for 1990-91 and future years — all income is assessable on the basis of the income of the year of assessment and this will be included in a return which will be completed after the end of the tax year. The doubling up of work which arose for back years, and particularly for 1988-89 and 1989-90, in Revenue offices will no longer arise. This change will also help taxpayers and tax practitioners. It is expected that the current year basis of assessment will bring about a big reduction in correspondence in future years.

As part of on-going efforts being made to speed up the processing of returns and dealing with correspondence generally, Dublin tax district has been heavily computerised. The installation and widespread use of this equipment has led to certain difficulties and remedial work is in progress at the momemt.

Other improvements were also introduced: revised work arrangements to deal with repayments were devised in March last but were only finally agreed by staff representatives in late August. These revised work arrangements are already having an effect on the speed at which repayments are handled. Also, a revised scheme of work organisation has been agreed with staff representatives and this is in the course of implementation at the moment. In addition, most of the resources previously allocated to the processing of returns are now engaged in dealing with queries, etc.

The Revenue Commissioners are conscious of the need to respond to taxpayers' queries quickly and without fuss. They are constantly examining their procedures with a view to eliminating, as far as possible, the need for practitioners and taxpayers to be in extended contact with their tax office.

Present indications are that the arrears will be cleared within two months.