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Dáil Éireann díospóireacht -
Tuesday, 17 Dec 1996

Vol. 473 No. 1

Written Answers. - Coal Smuggling.

Seamus Brennan

Ceist:

75 Mr. S. Brennan asked the Minister for Finance if his attention has been drawn to the effect on Irish coal dealers of coal smuggling from Northern Ireland to the Republic in view of the 12.5 per cent VAT rate levied in the Republic; the volume of illicit coal discovered as a result of this activity; and if he will make a statement on the matter. [24298/96]

I assume the Deputy is referring to the commercial supply of coal by traders from Northern Ireland, where coal is taxed at 8 per cent. There are no statistics available in relation to the irregular supply of coal in the State.

The position is that, under the rules of the Single Market established on 1 January 1993, coal dealers based in Northern Ireland who sell to the general public in this State are obliged to register and account for Irish VAT on their intra-Community acquisitions and sales here. Such traders therefore have the same obligations as other VAT-registered traders here and must charge VAT at 12.5 per cent on supplies of coal. Traders making intra-Community acquisitions receive the goods zero rated. However, they must account for the relevant Irish VAT in their VAT return, but are entitled to take a simultaneous credit; VAT must be charged on all their supplies of goods in the normal way.

In order to prevent abuse of the VAT system, a series of legislature and procedural arrangements were put in place as part of the Single Market regime.

In particular, traders in each member state are obliged to furnish a quarterly return to their tax authorities of all their zero rated supplies to traders in other member states — these are called VIES returns here and ESL returns in the UK. In addition, special mutual assistance arrangements facilitate the transmission of the material between national authorities so that traders' quarterly returns can be checked against the normal VAT returns of the traders in receipt of the supplies.

I understand from the Revenue Commissioners that, as a result of complaints received in 1993 and 1994 about VAT evasion arising from cross-Border trading between here and Northern Ireland, a systematic programme of visits by Inspectors of Taxes to various targeted sectors around the country, including coal merchants, was carried out. That programme resulted in the regularisation of the VAT status of the traders concerned, where such action was appropriate. The Revenue Commissioners continue to monitor the situation and take appropriate action where necessary.

I would suggest to the Deputy that, if he has any specific information in regard to irregular supplies of coal, he should contact the Revenue Commissioners, VAT Administration Branch, Indirect Taxes Division, Dublin Castle, Dublin 2, who will investigate the matter. They will, of course, treat any such information received in the strictest confidence.
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