Vol. 481 No. 4
123 Mr. Haughey asked the Minister for Finance if he will introduce a provision in the next Finance Act to allow for the payment of interest to individual PAYE taxpayers in cases where tax has been overpaid; if his attention has been drawn to this practice in the United Kingdom; and if he will make a statement on the matter. [16460/97]
The PAYE system is designed to ensure, as far as possible, that the right amount of tax is collected from employees during the course of the year, with adjustments to tax payable being made by the employer in the course of the year as necessary. However, overpayments and underpayments will arise where the correct allowances have not been given in the certificate of tax-free allowances. In such cases, any refund due or additional tax payable will be dealt with by way of review, normally after the end of the tax year. Revenue is prepared to adjust taxfree allowances in the course of the year if the employee's circumstances change.
I am informed by the Revenue Commissioners that PAYE overpayments are refunded as quickly as possible and that this process has been speeded up considerably as a result of computerisation. PAYE underpayments on the other hand are generally collected by way of an appropriate reduction in the employee's allowances in the subsequent year or years — to facilitate the taxpayer and to avoid undue hardship from having to pay the balance due in one lump sum. Interest is not added to PAYE refunds, but neither is interest charged on PAYE underpayments.
I understand that the UK legislation provides for a "repayment supplement"— which is akin to interest — in limited circumstances but that is not an across the board scheme.
The arrangements for dealing with PAYE overpayments and underpayments here have been operating very satisfactorily and I have no plans to introduce a provision on the lines referred to by the Deputy.
