Dáil Éireann díospóireacht -
Thursday, 28 Oct 1993

Vol. 435 No. 2

Written Answers. - Interest on Tax Refunds.

Desmond J. O'Malley

Ceist:

53 Mr. O'Malley asked the Minister for Finance the reason interest is not paid by the Revenue Commissioners on PAYE refunds and overpayments when interest is paid by the Commissioners on overpayments by self-employed people; the reason PAYE workers are treated differently in this regard; and his views on whether this is fair if the overpayment arose because of a mistake by the Revenue Commissioners.

Minister for Finance (Mr. B. Ahern)

The provisions in the Taxes Act dealing with interest on overpayments of tax are designed to cater for situations where a taxpayer might overpay tax due to the fact that the law requires him to make payments of tax before the correct liability can be determined. The provisions are not designed to cater for any particular category of taxpayer or to make general provision for the payment of interest. The specific provisions permitting the payment of interest are:—

—section 30 of the Finance Act, 1976 provides for the payment of interest where an overpayment arises on the determination of an appeal against an assessment. The procedures for tax appeals require taxpayers to pay the tax in dispute prior to the appeal hearing. If the tax is subsequently found not to be due the law permits the payment of interest.

—section 12 (7) Finance Act, 1988 provides for the payment of interest on the overpayment of preliminary tax by the self-employed. The tax law requires the payment of preliminary tax before the end of the tax year and before the taxpayer's income is known.

The question of paying tax in advance of determination of the liability does not generally arise in the PAYE system. The system is designed to ensure that the correct amount of tax is deducted throughout the year. The vast majority of refunds arise from the claiming of additional allowances by employees after the end of the year.