Dáil Éireann debate -
Thursday, 25 Jul 1996

Vol. 468 No. 4

Written Answers. - Construction Industry Credit.

Seamus Brennan

Question:

98 Mr. S. Brennan asked the Minister for Finance his views on whether the Revenue Commissioners overextend credit to business in the construction industry; his views on whether excessive credit on taxes due allows undercutting of prices and results in an ultimate weakening of the industry; if he will agree that out of five construction industry liquidations in the period of January to May 1995, the Revenue Commissioners were the single largest creditor being owed £1,108,160 out of liquidation debts of £2,634,783, a debt ratio of 42 per cent; the amount currently owed to the Revenue Commissioners by businesses in the construction industry which are trading, in liquidation or in receivership for the period June 1995 to the latest accounting period; the total amount due on this basis in the period January to May 1995, along with the amount recovered or still outstanding; and if he will make a statement on the matter. [15512/96]

Minister for Finance (Mr. Quinn)

I am informed by the Revenue Commissioners that they are not in a position to identify the five cases referred to in the question in the absence of more detailed information. However, the Commissioners point out that the amounts identified owing to Revenue in a liquidation are often based on estimates where returns were not made and include full interest on the amounts due, estimated or agreed.

In the period January 1995 to date there were 860 liquidations on record of which 101 can be generally described as pertaining to the construction industry. Liquidations and receiverships are by their nature long drawn out affairs and of the 101 cases only three are finalised. No liability was due to Revenue in any of the three cases.

The information requested on amounts currently owed to Revenue by all businesses in the construction industry from January 1995 to the latest accounting period is not available and could only be obtained at disproportionate cost. However, in the period June 1995 to date there are 80 construction industry cases in liqidation-receivership with an estimated £1.93 million due to Revenue. It cannot be stated at this stage how much of this sum will be recovered.

The Revenue Commissioners are not in the business of extending credit to companies, whether in the construction industry or any other sector. They pursue taxes due from all companies as best they can so as to ensure that there is no competitive disadvantage to those who pay on time. However, where companies experience temporary cash-flow difficulties and run up arrears of tax, the Commissioners will, once they are satisfied that the company is not inherently insolvent and that the company is capable of repaying the arrears as well as current taxes as they fall due, consider proposals to discharge the arrears by instalments over a reasonable period of time in the interests of allowing the company to survive. All such instalment arrangements attract statutory interest which is charged at a rate higher than commercial banking rates. On the other hand, if the Commissioners are satisfied that the arrears position is irredeemable, then they have no option but to take appropriate action to safeguard the tax yield. I am satisfied that, in all the circumstances, the approach adopted by the Commissioners is a pragmatic one and also one which protects the interests of the Exchequer while taking account of temporary problems that may affect bona fide companies.