Dáil Éireann debate -
Wednesday, 8 Jul 1992

Vol. 422 No. 4

Written Answers. - Corporate Tax Sector.

Pat Rabbitte

Question:

21 Mr. Rabbitte asked the Minister for Finance if his attention has been drawn to the resolution adopted at the recent conference of the Irish Municipal, Public and Civil Trade Union which described the corporate tax sector as virtually unpoliced; if, in view of the fact that this union represent many tax officials who could be expected to be familiar with the situation, he will outline his response to the resolution; and if he will make a statement on the matter.

Minister for Finance (Mr. B. Ahern):

The resolution to which the Deputy refers covers a range of issues. I am confining my reply to the policing of the corporate sector referred to in the question.

I totally reject the suggestion that the corporate sector is unpoliced. The Revenue Commissioners have a comprehensive programme in place to ensure that the corporate sector complies fully with its tax obligations.

Self assessment for the corporate sector was introduced in September, 1989 and the first returns were due by 1 July, 1990. As the Deputy will appreciate the various programmes are, therefore, at the developmental stage but considerable progress has already been made.

The compliance programme to ensure that returns are lodged on time secured 73 per cent of the 1989 returns by 31 December, 1991. This compares favourably with an ultimate response rate of less than 50 per cent in the pre self assessment era. The actual response rate may in fact be shown to be higher when a programme to remove dormant companies from the Revenue record is completed by the end of this year. Another feature of the corporate sector is that many companies do not have a tax liability in a particular year because of losses, capital allowances and other reliefs. The surcharge for late submission of returns has not been effective in securing returns from many companies in this situation. I have strengthened the Revenue's hand in this regard by a provision in this year's Finance Act which disallows in part certain claims to relief and offset of losses in the year in which a return is submitted late.

The audit programme for the corporate sector got under way in 1991. Of the 76 inspectors currently engaged in self assessment audits some 24 deal with the corporate sector. In 1991 over 11,000 corporation tax returns were screened and of these audits were initiated in approximately 900 cases. There has been a further expansion in the audit programme this year. From January to March some 7,200 returns were screened and some 200 audits initiated. There are many dimensions to the audit programme for the corporate sector. Within the overall corporate audit programme there are specific audit operations in the VAT, PAYE (Employer) and construction industry tax area which impact directly on the corporate sector. It is estimated that over 6,500 such audits have been carried out in 1991.

As part of the development of the self assessment system the Revenue Commissioners have specific proposals aimed at a further strengthening of the entire audit programme including the corporate sector. In relation to the corporate sector these proposals involve the putting in place of specialist districts to focus on particular sectors of economic and commercial activity. The implementation of these proposals requires the active support of all sides within the Revenue Commissioners to secure the necessary deployment of staff on the most efficient basis. The Revenue proposals have been put to staff interests and their response is awaited.