Section 14 of the Finance Act, 1987 specified those bodies which were to be treated as "accountable persons". The list of accountable persons was updated in 1988 to include certain other bodies including the VHI and "other authorised insurers" and in 1992 further additions were made. The current list of accountable persons is set out in the Second Schedule to the Finance Act, 1992, this list is now being updated as specified in section 10 of this year's Finance Bill. The total number of accountable bodies is in excess of 600 and, therefore, it is not feasible for me to name each one at this stage. I have arranged with the Revenue Commissioners to supply the Deputy with the current list.
The professions and services liable to the tax are covered by the definition in section 13 (1) of the Finance Act, 1987. They include: services of a medical, dental, pharmaceutical, optical, aural or veterinary nature; services of an architectural, engineering, quantity surveying or surveying nature, and related services; services of accountancy, auditing or finance and services of financial, economic, marketing, advertising or other consultancies; services of a solicitor or barrister and other legal services; geological services, and training services provided on behalf of FAS.
As well as those specifically included in the definition, the term "professional services" is intended to embrace professional services in the generally accepted sense of that expression.
The Exchequer yield from the tax in 1993 was £69.3 million. This is a net figure after allowing for direct and interim refunds.
Withholding tax at the rate of 27 per cent is deducted by the accountable person at the time the payment is made. In the case of self-employed individuals this tax is then available for credit or offset against the taxpayer's final liability in the following year.
The legislation introducing withholding tax was enacted in 1987. The following changes have been made since then:
In 1988 the withholding tax system was extended to cover payments made by medical insurers in respect of certain medical expenses payable under a contract of insurance. Eolas, the Nuclear Energy Board, CERT and a voluntary public or joint board hospital in receipt of grant aid from the Department of Health were added to the list of accountable persons. The legislation was also amended to take account of the takeover by FÁS of all the functions of AnCO.
In 1990 the legislation was amended as a result of the changeover to the current year basis of taxation for self-employed persons. Prior to 1990 such persons paid tax on the basis of their earnings in the previous year. Withholding tax deducted was held on account to be set against the actual tax liabilities which came due the following year. When the self-employed moved to a current year basis in 1990, the Government decided that there would be no change in the withholding tax — the credit continued to be available in the following year.
In 1992 the legislation was amended to include semi-State bodies and their subsidiaries in the list of accountable persons.
Persons who are awarded public sector contracts or apply for State grants in excess of £5,000 are obliged to present a current tax clearance certificate to the contracting or grant paying authority.
