Dáil Éireann díospóireacht -
Thursday, 13 May 1999

Vol. 504 No. 6

Adjournment Debate. - Exercise of Revenue Powers.

Mr. Killeen

Go raibh maith agat, a Leas-Cheann Comhairle, as ucht cead a thabhairt dom an t-ábhar a phlé.

We have all heard anecdotal evidence of over-zealous use of the powers available to Revenue and customs personnel. People in this House have generally taken the view that tax evasion must not only be condemned but also addressed in terms of better legislation and provision of resources. I strongly support that approach. I have often felt that the Revenue Commissioners and others were unjustly attacked on occasion in the House and in the media for failure to deal with drug barons, politicians, the so-called golden circle, beef barons, non-resident account holders and many others. On one occasion I had a complaint about the handling of a particular manner, and I accepted the explanation at the time.

We are all aware that the Institute of Taxation has made a strong submission and expressed certain reservations about some of the powers. The current issue of Business and Finance contains an article which raises serious questions. While there are codes of practice and charters of rights for taxpayers, there are many questions to be answered. The experience of one of my constituents led me to raise this matter.

The individual concerned imported a car, checked the cost of clearance, could not afford it at the time because he was building a house – he works in a factory and is not very well paid – and his old house had not yet been sold. He left the car on private property, and he was assured that was all right. On Friday last, a caller to his place of work expressed an interest in buying the car. My constituent explained that he was not interested, and could not sell it as the duty had not been paid.

He made two very serious errors in law. First, he succumbed to what I understand was severe pressure and agreed to allow the caller to see the car. Second, he allowed himself to be cajoled into moving it to a public place to have it viewed. Anybody listening to this debate will be as shocked as I am and as he was to find that when he went out on to the public road two uniformed Customs officials were lying in wait for him and the car was impounded. There is room for coincidence, but I do not believe it on this occasion, nor is it being claimed. He reached the inevitable conclusion that he had been set up and enticed or entrapped into committing the offence that was required in order to have the car taken from him.

Have we in this House given such powers to these people? If we have, is this the way we intended them to be used? I suggest that it is not. This case warrants immediate action to revoke those powers if they exist, or at least to put in place an independent monitoring mechanism to deal with them.

In fairness, there has been an attempt by the superiors of the gentlemen involved to address the issues. They have offered a £400 reduction in the penalty which brings it down to £200, and what could be interpreted as an apology. I have taken the view that that is a matter between the constituent and his legal adviser and the Revenue Commissioners, and it is being dealt with as such. However, the principle of the conduct of this matter and how the Revenue Commissioners deal with it is a matter for this House. I am talking about a man who has been working since he was 16 years of age, a PAYE taxpayer whose taxes were used in part to put these officers through second and third level education, opportunities which were denied to him because of circumstances at the time. He was deeply offended and shocked at the way he was treated, including having allegations made about how he could afford to build a house.

In view of the evidence from a number of quarters, such as the Taxation Institute, the matter must be addressed in this House. We have ultimate responsibility for putting the legislation in place and for providing resources. There is a clear onus on us to ensure that the powers which are available are used in a manner with which we are satisfied, which is above board and does not ill-treat compliant, decent, hard working citizens in an effort to ensure that others, whose activities clearly need to be addressed, are also looked at.

I urge the Minister to ensure that this matter is followed up, that the apology and the level of reduction that has been offered is further addressed. More fundamentally, we in this House should follow up on the powers we have granted and ensure that the people who have them use them in a manner with which we are happy.

Minister for Health and Children (Mr. Cowen)

In answering this motion on behalf of the Minister for Finance, I want first, as I have done on various other occasions, to recognise the sensitivities that are required for the exercise of Revenue powers in the matter of tax compliance and collection. This sensitivity is heightened when powers are exercised in an outfield environment, face to face with the taxpayer or citizen.

Detailed procedures are set out for all Revenue officials in this area. In the case of the Revenue mobile service, great care is taken to get the balance right between the need to pursue the effective collection of tax or duties and the right of the taxpayer to fair treatment. This message is very clearly set out in the Customs and Excise Enforcement Procedures Manual in which the commissioners set out guidelines for their officers engaged in such duties. The twin principles of proper authority to exercise powers and the standard of reasonableness and professionalism in the manner of execution of these powers form the basis for action and conduct. Officers are also under a strict obligation to exercise courtesy and consideration at all times in dealings with the public.

Revenue has also gone to considerable lengths to make taxpayers aware of their rights and of the avenues open to them if they have a complaint. There are a number of such avenues. First, a request for an internal review by an officer not involved in the case may be made to the Revenue Commissioners. Second, the laws pertaining to customs and excise matters, in common with other tax laws, enable taxpayers to appeal to the independent appeals commissioners on tax matters and, of course, to the courts to vindicate their rights. Third, as we are fully aware, the avenue of having cases raised in the House, by parliamentary question or otherwise, is also available. Fourth, questions of abuse of powers or maladministration can be taken up with the Ombudsman who deals with tax matters within his overall remit. Last year he dealt with 123 complaints in relation to Revenue matters.

From another perspective, the manner in which Revenue conducts its business is subject to the audit scrutiny of the Comptroller and Auditor General. Therefore, it can be seen that the operations of the Customs and Excise service and Revenue operations generally are subject to considerable external monitoring with strong checks and balances built into the system.

The need for an effective mobile outfield service in Revenue cannot be doubted. Not all tax business can be conducted from a desk or by correspondence. In certain circumstances the situation on the ground must be assessed. An element of enforcement work inevitably involves physically policing the system and making contact with the public on site.

Since the advent of the Single Market in 1993, frontier controls have been largely removed. However, without alternative non-frontier controls, essential revenues would be exposed to serious risk and legitimate trade damaged, notably in the excise duty area which includes vehicle registration tax. There is also the need to maintain a service capable of responding to the threat of smuggled goods subject to prohibitions and restrictions, such as illegal drugs, banned animal products, counterfeit goods and pornography. This is where the Revenue mobile service has played an essential role. Since 1998 the service has taken on wider revenue duties which I will refer to later.

In keeping with the Revenue Commissioners' policy of encouraging voluntary compliance, the Revenue mobile service will normally issue warnings to members of the public, rather than take immediate enforcement action such as seizure, unless the case is of such importance and nature that this approach is inappropriate. For example, in the specific area of enforcing compliance with the rules of vehicle registration tax, official procedures make specific provision for the issue of special forms serving as a warning, in advance of enforcement action, to owners or persons in charge. Last year 2,280 such forms were issued in respect of foreign registered vehicles being driven in the State. If it is found necessary on reasonable suspicion to detain a vehicle, a detention period of one month is provided by law to allow for examination, inquiries or investigations to be made for the purpose of deciding whether the vehicle is liable to forfeiture or, on the other hand, should be restored to its owner.

This period affords the citizen the opportunity of producing further material or proofs that may satisfy the officer as to the regularity of the vehicle's use. The penalties attached to offences do, of course, include prosecution in the courts. However, in the majority of non-aggravated cases, the Revenue Commissioners are prepared to close the case by imposing a compromise penalty geared to the seriousness of the offence, in addition to payment of the vehicle registration tax at issue. In all cases where goods are detained by Customs and Excise, a full report of the circumstances is sent to a central office responsible for enforcement policy and these reports are carefully monitored. In 1998 over £1 million in VRT payments was received directly following the 2,280 warnings issued. A sum of £161,017 was received as penalties in relation to 584 vehicles seized, and £223,893 as additional VRT on the same seized vehicles.

The strong role of the voluntary approach, based on warnings issued, is clear. It is interesting to note that in 1998, of the Revenue cases dealt with by the Ombudsman, only six related to VRT in general and only one case related to vehicle seizure. This is strong support for the view that staff employed in the Revenue mobile service do not act in an arbitrary or peremptory manner in enforcing the tax laws.

In carrying out their varied duties, RMS officers have no desire to appear confrontational, yet they must act firmly. In many instances, the customer may have ignored previous warnings or reminders issued, or persisted in failing to submit tax returns. An important part of the remit of the Revenue mobile service in new work areas is to help in obtaining tax returns and intelligence in order to assess the situation, report the facts and, if necessary, recommend a course of action.

Such visits can be valuable to a taxpayer with difficulties in clearing up a messy historic tax situation. In more traditional customs and excise work areas, a more direct action may be warranted involving detention of goods. The Revenue mobile service works closely with the Customs and Excise national drugs team and has assisted in large drugs-related operations. This is very valuable work on behalf of the community.

In all the circumstances, the establishment of any new independent monitoring mechanism for the Customs and Excise service is unnecessary. The Revenue Commissioners welcome comments and constructive criticism of their services, with a view to improving the effectiveness and standard of service, both to the general body of taxpayers and sectoral trade interests where appropriate. They are fully aware of the sensitivity attached to the exercise of enforcement powers and have informed me that where complaints are made, they are fully investigated and, if necessary, action is taken to prevent a recurrence.

I can assure the Deputy that his concern will be taken into consideration by the Revenue Commissioners. For his part, the Minister for Finance is equally concerned that proper balance and judgment are exercised at all times in these areas, while recognising that even with sensitive handling, effective enforcement work will occasionally cause some tensions and accusations of unfair treatment. The Deputy has made his position in relation to a specific case very clear to the superiors of the personnel concerned.