Special Committee Value-added Tax Bill, 1971 díospóireacht -
Wednesday, 28 Jun 1972

SECTION 19.

Dr. FitzGerald

I move amendment No. 20 :

In subsection (3), page 24, line 33, to delete "nine days immediately" and substitute "ninety days".

This amendment is necessary because the time provided is insufficient to allow an accountant to furnish to the Collector General a true and correct return; nine days is clearly inadequate—indeed, grossly inadequate—and I do not think it would be possible to work with such a period. That is not to say that, in some circumstances, if everything is running smoothly the taxpayer would not be able to submit his account within that period but, in many cases, it would be quite impracticable and the period needs to be considerably lengthened. I think that view is pretty widely shared by people in business and by accountants who have a good deal to do with furnishing these returns.

Mr. Colley

As I understand it, the object of this amendment is to extend the period of accountability, in other words, to deal with the problems of liquidity which we discussed earlier in the House. We have amended it to extend the accountable period from one month to two months. We have thereby gone a considerable distance in trying to meet the problem. If we look at how this amendment would work out we find that under section 19 (3) the tax chargeable for any taxable period falls due for payment between the 10th and the 19th of the month following the end of the taxable period which is now two months. Thus, tax chargeable for the taxable period ending on 31st December, 1972—that would be for November and December—falls due for payment between 10th January and 19th January, 1973. If we were to accept this amendment the latest date for payment of the tax for the taxable period November-December, 1972, would be 10th April, 1973. Consequently, in the first year of operation there would be virtually no tax paid during the first three months after the end of the first taxable period. This would probably cost the Exchequer about £28 million and the loss could be greater because during that interval, taxpayers would be entitled to repayments. Presumably they would put in their returns early and be getting their money back from the Revenue Commissioners during this period.

Mr. Tully

Did the Minister say the first year?

Mr. Colley

That would be the effect in the first year.

Mr. Tully

Surely there would not be anything repayable because there would not be any submitted?

Mr. Colley

They would have suffered tax on their purchases. The taxable period would be two months.

Mr. Tully

If it was not returned at all?

Mr. Colley

There is no reason why they could not claim for the tax they had suffered. This amendment talks about accounting for tax. It does not propose to restrict a claim for a refund.

Mr. Tully

It would be a bit unusual for it to work that way.

Mr. T. J. Fitzpatrick (Dublin Central)

At the moment it is a fortnight—the 15th to the 19th of the month.

Mr. Colley

Between the 10th and 19th.

Dr. FitzGerald

I am not wedded to the 90 days. This was put down to challenge the nine days and to have a discussion on it. The Minister has made a cogent case against the 90 days but I think we can make an equally cogent case against the nine days which is simply an unworkably short period for making returns. It is not a question of trying to increase liquidity. That is not the issue here. The nine days period is too short. The fact that under the turnover tax the period is longer makes that very clear. It will be no easier to make returns here. It will be more difficult to accumulate all the invoices.

Mr. Colley

Did the Deputy say it is a longer period in the case of the turnover tax?

Dr. FitzGerald

I understood the Minister just said it was ten to 19 days. Perhaps I misunderstood him.

Mr. Colley

It is the same period.

Mr. Tully

There is an error in the thing, I think.

Dr. FitzGerald

An error in what?

Mr. Tully

In the amendment because it is from the ninth day after the 10th.

Mr. Colley

Under the present system it is the nineteenth day on a monthly accounting period. Under VAT it will be the nineteenth day on a two-monthly accounting period.

Amendment, by leave, withdrawn.

Sections 19 and 20 agreed to.