Wednesday, 17 July 2013

Questions (68)

Robert Dowds


68. Deputy Robert Dowds asked the Minister for Finance if, in cases where some old age pensioners have inadvertently underpaid tax due to a failure of communication between the Department of Social Protection and the Revenue Commissioners, the normal interest and penalties which arise in such circumstances are payable. [35648/13]

View answer

Written answers (Question to Finance)

The Deputy will be aware that the Revenue Commissioners received information from the Department of Social Protection (DSP) in late 2011 in respect of individuals in receipt of pensions payments made by the DSP. Upon examining this information, it became clear that a large number of these pension recipients had not reported their pension income to the Revenue Commissioners even though they were advised to do so by DSP in the awards letter that the Department issues to all first-time pension recipients. The priority for the Commissioners, in the first instance, was to ensure that the tax record was correct for 2012 onwards and thereafter to examine in detail the highest risk cases. In the follow up projects, it was necessary to distinguish between those taxpayers who pay their tax through the PAYE system and who, as a matter of course, do not, and are not required to submit an annual tax return and self-assessed tax payers who complete an annual return of income where they are specifically invited to include payments from the DSP.

In relation to PAYE taxpayer, Revenue wrote to three separate tranches of PAYE taxpayers who had not returned details of their DSP pensions, that is, those with annual non-DSP income exceeding €50,000, those with non-DSP incomes of between €40,000 and €50,000 and those with non-DSP incomes of €30,000 to €40,000. In their correspondence, I am informed, Revenue gave the taxpayers the opportunity to complete a disclosure statement and pay the outstanding tax due within thirty days of the final liability being calculated without incurring interest or penalties. I am further informed that the vast majority of pension recipients contacted have met the necessary conditions, have settled their affairs and avoided having to pay any interest or penalties. This project is nearing conclusion.

The Commissioners also advise that a separate project commenced earlier this year to examine those cases in the self-assessment system who had not returned details of their DSP pension on their annual return. This category would include self-employed taxpayers, company directors, persons with reasonable amount of non-PAYE income etc. Revenue has pre-populated the tax returns of these taxpayers from tax year 2011 onwards with details of their DSP payments to ensure that they are tax compliant in relation to these payments in the future. In addition, they have written to the highest risk cases, providing them with an opportunity to advise Revenue of outstanding taxes on these payments in relevant prior years.

The charging of interest and penalties on tax settlements in relation to these taxpayers is governed by the “Code of Practice for Revenue Audit”, which can be viewed on the Revenue website at For this project, the Commissioners decided that the lowest category of penalty – i.e. for an unprompted voluntary disclosure – would be appropriate for those cases who responded in a timely manner.

The Commissioners also advise that since early 2012 they receive a weekly file of data from the DSP with details of new, amended and ceased DSP pension payments which they update to the relevant pension recipient’s tax record. However, it is important to point out that the onus remains on any individual who receives a new source of income to report it to Revenue or to include it in their annual tax return, as appropriate.

Lastly, the Commissioners advise that if the Deputy has a query in relation to a particular taxpayer, he can contact the Revenue Commissioners with any such details.