Dáil Éireann Debate, Thursday - 22 September 2022
215. Deputy Peadar Tóibín asked the Minister for Finance if he will consider examining the backdating of the incapacitated child tax credit; if his attention has been drawn to the fact that the credit can only be awarded for four backdated years and that many have looked for services for longer than that to get their children diagnosed. [46503/22]
View answerThe Incapacitated Child Tax Credit (ICTC) is provided for in section 465 of the Taxes Consolidation Act 1997 (TCA 1997) and is available to any individual who proves that he or she has living, at any time during a year of assessment, a child who:
- if under the age of 18, is permanently incapacitated by reason of mental or physical infirmity to such an extent that there is a reasonable expectation that the child would be incapacitated from maintaining him or herself if they were over the age of 18; or
- if over the age of 18, is permanently incapacitated by reason of mental or physical infirmity from maintaining him or herself and had become so incapacitated either before attaining the age of 21 or whilst in full-time instruction at any university, college school or other educational establishment.
The credit may also be available where an individual has custody of and maintains at his or her own expense any child who fulfils the above criteria.
The Incapacitated Child Tax Credit is valued at €3,300 and a separate credit is available in respect of each child who is permanently incapacitated.
In order to claim the credit, taxpayers will be required to provide a Form ICC2 which sets out the extent of the child’s incapacity and has been certified by a medical practitioner. In some cases, Revenue may ask the claimant to provide additional supporting documentation to prove his or her entitlement to the credit.
Where a doctor certifies that a child was incapacitated for earlier periods, a claimant may be entitled to receive the credit for those earlier years of assessment. This is, however, subject to the ‘four-year rule’ provided for by section 865 TCA 1997.
Section 865 TCA 1997 provides a general right to repayment of tax where a person has paid tax which is not due, however subsection (4) sets out that that right is subject to the making of a claim within a statutory limit of four years after the end of the chargeable period to which the claim relates. That statutory limit is binding on Revenue as well as on taxpayers. Determinations of the Tax Appeals Commission in differing appellant circumstances confirm that there is no discretion in the application of the four-year rule for claiming repayments.
Section 865 was introduced in 2003 and provides a statutory general right to repayment of tax as well as payment of interest, subject to the four-year time limit. It provides that no repayment may be made based on claims submitted more than four years after the end of the chargeable period to which they relate. Prior to its introduction there was no statutory right to repayment, though a taxpayer could sue for repayment under common law. The Minister for Finance at that time indicated that, in introducing the new arrangements, he was satisfied that they achieved the necessary balance between establishing a fair and uniform system for taxpayers while providing necessary protection for the Exchequer. I am satisfied that that continues to be the position.
When section 865 was introduced, Revenue’s general right to raise assessments or make enquiries in relation to taxpayer returns was also reduced to four years, although in certain circumstances, for example where fraud or neglect is suspected or in the context of the application of general anti-avoidance rules, Revenue's right to raise assessments or make enquiries is not time limited. Previously, the general time limit on the raising of assessments by Revenue had been ten years. The provision of a four-year time limit for Revenue raising assessments and making enquiries and for taxpayers to claim a repayment of tax creates parity between both positions. An increase in one limit would have to be considered in the context of corresponding increases in other time limits in order to preserve that parity.
I have no plans at this time to amend the four-year limit in section 865.
Further information in relation to the ICTC can be found on Revenue’s website or in Tax and Duty Manual Part 15-01-05, both of which may be found at the links below:
- Revenue website: www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/children/incapacitated-child-credit/index.aspx
- Tax and Duty Manual Part 15-01-05: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-05.pdf.
