Adjournment Debate. - PAYE Balancing Statements. – Dáil Éireann (28th Dáil) – Tuesday, 3 Mar 1998

Adjournment Debate. - PAYE Balancing Statements.

Mr. Durkan

Sir, I apologise for bringing the Minister, who is very busy on other matters, into the House this evening but I am sure if he were operating from my vantage point he would do the same. This question concerns a procedural matter to which I take strong exception. I do not blame the Minister; it is simply part and parcel of a system that needs to be changed.

I want to raise the subject matter of the reply to Parliamentary Question No. 177 of 24 February 1998 which asked the Minister for Finance the reason the commitment given in his reply to Parliamentary Question No. 192 of 10 February 1998 was not honoured; his views on the practice of altering a document prior to issue; his views on whether this is a normal and acceptable practice; the reason a reference was made to the lack of a P60 when in fact this documentation was never requested; and if he will make a statement on the matter.

By way of background information I should explain that this is an ordinary matter where a constituent made an application for a higher education grant, a prerequisite to which is the issue of a P21 which is used in the determination of eligibility. A P21 is a record of the income received and tax paid by the taxpayer. In this case it was suggested that, because the taxpayer had not filed a written return of income, he would not receive the P21. This person is entitled to that information regardless of whether he has filed a recent return.

The important element is the reply to the question on 10 February, which asked the Minister for Finance the reason for the delay in the issue of a P21 in the case of a person (details supplied) in County Kildare in view of the fact that he has an up to date P60 and has been in continuous PAYE employment for 15 years; and if he will state the normal criteria for the issue of a P21. The reply stated:

I am informed by the Revenue Commissioners that when the inspector of taxes received the application on the taxpayer's behalf for a P21, a PAYE balancing statement, she wrote to him and requested him to complete a return of income for the 1996-7 tax year and forward any supporting documents.

In general, requests for balancing statements are dealt with as soon as possible by districts once the facts are established regarding total income and allowances. Where the information on file is not current, taxpayers are normally asked to complete a return of income form. [I dispute that. That is not the norm. ] In the particular circumstances of this case, the P21 will issue shortly in advance of receipt of a return of income.

This is now a procedural matter. The P21 did issue, but written across it were the words: "This is a provisional document that has been prepared without sight of a P60 and without receipt of a return of income". This was an altered document, yet nobody had the authority to alter it. A commitment was given by the Minister to this House that the P21 would issue in a particular form. That did not happen; it was qualified. Nobody has the right to alter a commitment given by a Minister to the House. Regardless of the circumstances, once that commitment is made by the Minister in good faith, nobody has the authority to alter it. I challenge anybody to dispute that.

This constituent has been in the same employment for the past 15 years or more. He has not had any difficulty in making a return of income and he indicated to the section in question that there was no difficulty provided he received the P21 as requested.

Altering or in any way deviating from a commitment given in a reply to a parliamentary question is a serious procedural matter. It should not be necessary for me to bring the Minister into the House on a matter of this nature but I hope he will take account of it and remedy the matter.

Minister for Finance (Mr. McCreevy)

I thank Deputy Durkan for raising the matter this evening. Matters relating to Kildare North are important for the good of the people of Ireland.

As regards what happened in this particular case, I understand the Deputy wrote to the Revenue Commissioners in Dublin Castle on 19 December 1997 on behalf of a constituent who was applying for an education grant and requested a P21 on his behalf and on behalf of his father.

It is important in responding to the Deputy's request to outline the normal procedure regarding the issue of a P21. The P21 is a balancing statement issued normally on request by a taxpayer when the taxpayer is delivering his annual return. Based on the figures in the return and on the form P35 received by Revenue directly from the taxpayer's employer, the inspector is able to calculate the final tax position for the tax year and to indicate to the taxpayer the final figure in respect of income and allowances, any claims for exemptions and reliefs and ultimately whether tax was underpaid or overpaid for the year.

However, the P60, which is issued by the employer directly to the employee, is the form on which employees rely to clarify their income position and should be lodged by them with their return annually. As the Deputy will appreciate, the normal practice is to issue a P21 on receipt of a completed return of income.

I understand the Deputy's letter of 19 December was referred to the constituent's local inspector of taxes. The inspector wrote to the Deputy's constituent on 13 January 1998 asking him to complete a form 12 — return of income — for 1996-7 together with any supporting documents, i.e., certificate of home loan interest paid in the year ended 5 April 1997, etc.

The letter also requested details of the constituent's son's RSI number and ended by stating that, on receipt of a full reply, the inspector hoped to be in a position to issue a PAYE balancing statement for 1996-7 and to advise the relevant inspector of taxes to issue the same to the constituent's son. On 19 January 1998, a letter was sent to the Deputy informing him that the inspector had written to his constituent in the above terms.

At this point, I understand the Deputy contacted the official in the Revenue Commissioners head office in Dublin Castle who had issued that letter and discussed the matter with him. I understand the Deputy made the point that he was unhappy that the inspector was insisting on the completion of a return of income before the issuing of the P21 and that the Deputy considered that the inspector was not entitled to attach such a precondition to the issue of the P21.

Following further discussions between Revenue's head office and the local inspector, it emerged that no return had been received from the Deputy's constituent for approximately ten years and that the inspector did not consider that there was sufficient information available to issue the P21 in the absence of a return.

I understand the Deputy pressed the issue strongly and on being informed that the P21 would not issue declared his intention of putting down a parliamentary question on the matter and subsequently put down two parliamentary questions for written answer on 10 February 1998.

On receipt of the notice of the parliamentary questions, Revenue's head office contacted the Deputy to discuss the matter further with him. I understand that again the Deputy insisted the inspector did not have the right to refuse to issue the P21. However, I understand that in the course of that conversation the Deputy stated that he had no difficulty with the idea of completing a tax return but not necessarily in advance of the issue of the P21.

It also emerged at that stage that, as Revenue understands it, the Deputy was more interested in the figures which would emerge from the P21 than the idea that it should be a final balancing statement showing an underpayment or over-payment of tax.

Mr. Durkan

That is not true.

Mr. McCreevy

In that context the Revenue Commissioners agreed to issue a P21 on the basis of the figures available to the inspector in advance of the receipt of the return, and my reply to the Deputy's first question on 10 February was issued on that basis.

I understand the Deputy, on receiving that reply, contacted the Revenue Commissioners again expressing his dissatisfaction. I understand also that he acknowledged that the information on the P21 was what was required by his constituent but that he could not accept the endorsement showing that it was not final and that if a clear P21 was not issued, he would put down a further parliamentary question and, if necessary, raise the matter on the Adjournment.

The Deputy put down a further parliamentary question for answer on 24 February:

To ask the Minister for Finance the reason the commitment given in his reply to Parliamentary Question No. 192 of 10 February 1998 was not honoured; his views on the practice of altering a document prior to issue; his views on whether this is a normal and acceptable practice; the reason a reference was made to the lack of a P60 when in fact this documentation was never requested; and if he will make a statement on the matter.

The reply states:

I am informed by the Revenue Commissioners that, as stated in my reply to Parliamentary Question No. 192 of 10 February 1998, form P21 (Balancing Statement) issued to the taxpayer in advance of receipt of a return of income. I am further informed by the Commissioners that the last return of income completed in the particular case was at least ten years ago. The inspector of taxes did not have current information for the case other than the fact that the taxpayer had an employment subject to PAYE. In the particular circumstances, the inspector has no option but to endorse the P21 accordingly.

On receipt of a return of income and supporting documentation (which would normally include the P60) a final balancing statement, if required, will be issued immediately.

Mr. Durkan

That is not an accurate report.

Mr. McCreevy

While I appreciate very much the Deputy's position on behalf of his constituent and in particular that he is a compliant PAYE taxpayer on a relatively modest wage, I hope the Deputy will accept that the inspector in this instance was quite within her rights to insist on a return of income being lodged and that on receipt of such return a clear P21 would have been issued quickly.

I also trust the Deputy will accept that the issue of the P21 and the reply to his question of 10 February were done in good faith and in the expectation and understanding that the Deputy's requirements and those of his constituents would be satisfied. The Deputy's constituent's return of income has not yet been received by Revenue and I assure him that on receipt of a completed return of income the final P21 will issue immediately to his constituent.

Dáil Éireann díospóireacht -
Tuesday, 3 Mar 1998