Committee Reports::Report - Appropriation Accounts 1976::09 November, 1978::MIONTUAIRISC NA FINNEACHTA / Minutes of Evidence


(Minutes of Evidence)

Déardaoin, 9 Samhain, 1978

Thursday, 9th November, 1978

The Committee met at 11 a.m.

Members Present:


N. Andrews,




C. Murphy,



DEPUTY O’TOOLE in the chair.

Mr. S. Mac Gearailt (An tArd-Reachtaire Cuntas agus Ciste) called and examined.


Mr. J. F. Richardson called and examined.

195. Chairman.—The Comptroller and Auditor General has reported in paragraphs 7-11 as follows:

Revenue Account

A test examination of the Revenue Account has been carried out with generally satisfactory results.

The net yield of Revenue for the years 1976 and 1975 under its main heads is shown in the following statement:—















Estate, etc.,








Wealth tax















Capital Gains












Income tax and












Profits tax




Corporation tax


Turnover tax




Wholesale tax















levies, etc.







I have been furnished with the following analysis of amounts of income tax, sur-tax, corporation profits tax and capital gains tax outstanding:—


Tax under appeal or under inquiry

Tax not in dispute but collection held up for such reasons as bankruptcy, death, etc.

Tax due for collection





Income tax




(as at 31 May 1977)











1974-75 and earlier years














(as at 31 March 1977)











1974-75 and earlier years










Corporation Profits tax




(as at 31 March 1977)








1974-75 and earlier years










Capital Gains tax




(as at 31 March 1977)





















Comparative totals for the previous year are Income tax, £77,478,586; Sur-tax, £5,488,363; Corporation Profits tax, £15,295,014.

I have also been furnished with a certified statement showing the totals outstanding at 31 May 1977 in respect of warrants issued up to 31 December 1976 for Wealth tax and Capital Acquisitions tax as £60,634 and £43,133, respectively.

Extra-Statutory Repayments of Customs and other Duties

Extra-statutory repayments of Customs duties, £19,302, Excise duties, £35,244, Value-Added tax, £13,296 and Stamp duties, £3,614, were made during the year.

Remissions and Amounts Irrecoverable

I have been furnished with schedules of the cases involving a loss of £100 or upwards in which claims for duty under the Revenue Acts were remitted without statutory authority or passed as irrecoverable during the year ended 31 December 1976. The total amount of the items included in the schedules, £228,473, is made up as follows:—



Estate, etc., duties (2 cases)



Income tax (146 cases)




Sur-tax (6 cases)





Corporation Profits tax (11 cases)


Turnover tax (22 cases)




Wholesale tax (8 cases)




Value-Added tax (6 cases)






The distribution according to the grounds of remission or write-off is:—





Composition settlements




On compassionate grounds



Amounts Irrecoverable


Miscellaneous: liability not


enforceable, etc.







I have made a test examination of the items included in the schedules with satisfactory results.”

Mr. Mac Gearailt.—These are the usual paragraphs relating to the collection of revenue and certain repayments, remissions and amounts written off. I have no further comment to make on them. They are for the information of members.

196. Chairman.—In paragraph 9 on page viii there are three columns. One concerns tax under appeal or inquiry; the second deals with tax not in dispute but where collection is held up for such reasons as bankruptcy, death, etc. The third column refers to tax due for collection. I presume it is straightforward and that this is collectible——

—In course of collection.

In regard to the second column, could you tell the Committee if you feel there is any possibility of having these amounts collected under the different headings, income tax, surtax, corporation profits tax and capital gains tax?

—Yes. The significant and from our viewpoint regrettable fact about the figures in this column is that they are amounts over which we have very little control. They have moved out of the area where the Revenue can exercise pressure: other legal processes have taken over. For instance, liquidation would come into it; once a company goes into liquidation all the proceedings become matters for the liquidator and very often under court supervision. The liquidator’s duty is to look at all debts owing by the company including Revenue debts and the supervising authority is the courts rather than the Revenue Commissioners. We have to await events. Sometimes these proceedings —bankruptcy, liquidation, winding up of estates—take a long time, time which seems unduly long to the interested parties other than Revenue as well as to Revenue. We have to await events and make sure that at the appropriate time we are there to demand our pound of flesh in so far as the law says it is ours. The only consoling thing from the revenue collecting standpoint is that in relation to the total collection, while the figure in absolute terms looks big, it is a very small percentage of the total amount that we keep under surveillance.

197. Deputy C. Murphy.—There is an indication on that page in the comparative totals for the previous year of a massive increase of some 75 or 80 per cent under the headings of income tax in the amount of money that is outstanding. What were the general reasons for this? Was it the type of year?

—I feel it is more complicated than that. Briefly the explanation is that the greater part of those figures is contained in the first column—Tax under appeal or under inquiry. There have been changes in the law in recent years which have tended to throw a greater amount of tax into the appeal category than was previously the case. The principal factor in this is provision for what I might call accelerated collection. At one time the system was that accountants would put in their accounts. Then the inspectors would have a look at them and in the great majority of cases would come up with an assessment based on the accounts which had been furnished and had been the subject of discussion. Then tax would be collected at some date after that. In order to secure a more timely flow of tax to the Revenue, provisions were brought in whereby the date for the payment of tax was brought forward from 1 January in any year to 1 October in the previous year. A consequence of this is that this tax is assessed in the absence of returns which in many cases will not be made up until 31 March or immediately prior to that. The inspector is under an obligation to make an assessment between that date and September when he must send out his demand and there is no time to finalise either accounts or assessments. The consequence of this is rather startling. At least 90 per cent of the assessments which go out are estimated, whereas under the regime of previous years the percentage of assessments which were estimated would be no greater than 40. Therefore, the figure for the year 1975-76—I should not talk about future years, but to get the whole picture this will be repeated in 1977— relates mainly to estimated assessments, and the immediate response of the taxpayer, generally through his adviser, is properly to appeal against the amount which is, in this very large percentage of cases, estimated. I will mention another complication in a moment, but it is only after that that the real examination, discussion and argument occur. The only figure that we have at this time is the estimated assessment, which we know. I should mention formally that we know that this is moving further and further away from a realistic figure. Perhaps I should discuss this matter generally by getting in touch either with you or with the Comptroller and Auditor General. The figures which come to you should reflect reality in some way, and at the moment we are moving further and further away from that despite certain efforts we are making to reduce the time between estimation and determination. The other factor which has tended to distort this figure—and a distorted figure it is—is that not sufficient attention was paid by the taxpayers’ advisers to another provision which was brought in whereby when you are appealing against an estimated assessment you may specify an amount which in your opinion is the correct amount, that is, the amount which is collectible rather than the assessed amount. We have been trying through our inspectors to explain to taxpayers and their advisers how important it is to specify in the statutory manner what the amount is which they believe will be payable, because this will save in a very important way interest accruing in many cases and will give our Office a more realistic view of what to expect. We are making rather slower progress on this process of education than we had hoped. In 1976 the number of people who specified an amount was only 50 per cent of the total who appealed. This has gone up to 62 per cent and we hope that gradually the importance of doing this will come home to taxpayers and their advisers. This is a rather long-winded way of answering your question about this huge increase. It is not necessarily related to the actual profits or a failure which was not there before to deal with accounts which have been submitted. A change of system has resulted in most of the figures for any current year being on an estimated basis. Almost invariably estimates tend to be higher than the amount determined after examination.

Chairman.—Thank you for your very comprehensive reply. There is one point I would like to mention. You say in your statement that your estimated assessments tend to be higher than the actual liability of a client and consequently you have a great deal of discussion and debate subsequent to appeals and the time of your inspectors is taken up in dealing with individuals. I wonder if you would consider trying to ensure that the estimated assessment is as near as possible to the actual assessment. There is an idea abroad that the Revenue Commissioners just think of a figure and demand that figure to start the whole process in motion. I am sure that is not the position, but with 90 per cent estimated assessments it would seem that in practically all cases there are appeals because the amounts are found by clients to be in excess of what they are liable for.

198. Deputy Woods.—Do I understand correctly that at the time of these accounts the estimates were made largely by the Revenue Commissioners; in other words, you are making the estimate, whereas the change at this time is that the individuals are being requested to make a more accurate estimate, especially through their economic advisers or accountants, so the estimate should be closer to a real figure in future?

—That should be one of the consequences.

Or is it more likely to be an underestimate? Is it more likely to be an overestimate when the Revenue Commissioners are helping?

—There is a statutory safeguard. If the taxpayer’s estimate is within 80 per cent, no interest is payable. If it is sadly below what it turns out to be, interest is payable on the amount by which it falls short of the ultimate determination. There is an inbuilt inducement to the taxpayer to try to aim as closely as possible at the real figure. I would not say that there is a deliberate policy of thinking of a figure. There are two categories of cases where the figures may be higher. The one I will mention first is the case of a man who has not made any returns and has paid the previous year on the basis of an estimated assessment without appeal. This gives rise to the feeling, rightly or wrongly, that he would not have been so happy about the situation if the estimate had not been a little lower than it ought to have been. Putting it bluntly, the estimate is raised in each subsequent year until he eventually appeals. At that stage he must produce accounts. That practice relates to small taxpayers. Taxpayers whose operations are of any magnitude must have accounts. Here the over-estimation occurs for a different reason. Whatever about the quantum of profits, our inspectors are not entitled to give allowances unless the allowances have been claimed in due form. An estimated assessment is often made and the figure of gross profit will not be very far out. Disputes arise in respect of allowances which should be set off against these, sometimes in the case of a company whose business mainly consists of exports, or in the case of a company that incurs heavy capital expenditure in bringing itself up to date. All of these things will not be known to the inspector until they are actually claimed.

199. Chairman.—I wonder what categories are covered by paragraph 10—extra-statutory repayments?

—Most of these repayments arise from refunds to diplomats who are, by international usage, not subject to the tax regimes of the countries in which they operate. In some cases it is not possible to waive the duties in advance. They are collected and a claim for repayment is made. There are other cases which derive from the fact that the taxpayers concerned are unable to pay and it would be a waste of public money to pursue them. That refers not so much to repayments as to remissions. There are other extra-statutory repayments which are made on grounds of equity, that is, the very hard case which was never contemplated when a law was being enacted. These are dealt with on an individual basis. One will look at a case and see that, while the tax has been paid strictly in accordance with the letter of the law, there is a grave inequity. In those cases we would always seek the sanction of the Minister for Finance to make a refund. The alternative might be to introduce legislation for a particular case, the consequences of which would not be easily foreseen. As this is an isolated case and there is no doubt about the equity, the sensible thing to do is to repay. The amounts involved are very small.

200. Deputy Woods.—I was particularly interested in the Accounting Officer’s reference to the small total amount. Looking at the 1976 figure, we find £.228 million, which is .018 per cent. The only thing that worries me a little is that the remissions on compassionate grounds were so extremely small, which seems to indicate that we are not very compassionate people. The percentage there looks like .00042, which I suppose is in line with the feeling that a hard line is taken about collection.

—This is so, if one looks at the figures, but by way of making an excuse, which perhaps I should not, these taxes would have been incurred sometimes by people in a position to pay them, and the funds that should have been used to pay them at the time have been dissipated in some other way. We are not engaged in chasing widows and orphans.

I was concerned with the case of a widow, and the compassion was fairly strained in that case. If anything, there must be scope for some more compassion in the administration of the service. I compliment the Accounting Officer and the Revenue Commissioners on the very low percentage of irrecoverable tax, for one reason or another.

201. Chairman.—Paragraph 12 of the Report of the Comptroller and Auditor General reads:

Wealth Tax

As stated in paragraph 15 of my report for 1975 the Wealth Tax Act, 1975 provides for the introduction of a tax at the rate of 1 per cent. on the net market value, on the valuation date, of the taxable wealth of assessable persons, subject to certain deductions and exclusions. The valuation date in relation to any year is 5 April of that year. The tax yield in 1976 was £6,488,613 which, with a balance of £14,411 on hands from 1975, brought the total amount payable to the Exchequer in 1976 to £6,503,024. Of this amount £6,497,000 was paid into the Exchequer during the year leaving a balance of £6,024. A test examination was made of the procedures for the assessment, collection and bringing to account of this tax with generally satisfactory results. Matters which came to light in the course of the examination and on which I sought the observations of the Accounting Officer are dealt with in subsequent paragraphs.”

Mr. Mac Gearailt.—This is a general paragraph on the wealth tax dealing with the amount collected and the amount paid over to the Exchequer.

202. Chairman.—Paragraph 13 of the Report of the Comptroller and Auditor General reads:

“Under the provisions of Section 15 of the Wealth Tax Act, 1975 a return of the property comprised in the taxable wealth of an assessable person was required to be submitted to the Revenue Commissioners not later than 5 October 1975 in relation to the valuation date of that year and not later than 5 July 1976 in relation to the 1976 valuation date. In the course of a test examination covering some 400 taxpayers’ files it was noted that at 31 October 1976 the 1975 returns were still oustanding in 39 cases and the 1976 returns were outstanding in 166 cases.

I sought information as to the steps being taken to ensure that outstanding returns would be submitted. In his reply the Accounting Officer pointed out that under the provisions of the Wealth Tax Act, 1975 a payment made on or before 5 December 1975 on account of the tax payable on 5 April 1975 and a payment made on or before 5 July 1976 on account of tax payable on 5 April 1976 prevented the accrual of interest on the amount so paid. The net effect of this was that the bulk of correspondence relating to the 1975 valuation date reached the Capital Taxes Branch of the Office of the Revenue Commissioners around 5 December of that year. Likewise, the bulk of the correspondence relating to the 1976 valuation date reached that Branch some seven months later, around 5 July 1976. The staff had therefore concentrated on processing the cases in which returns had been submitted and when the backlog of work in this area had been cleared it would be possible to reach the cases in which returns were not submitted. The Accounting Officer added that the duties of a new section set up in the Office of the Revenue Commissioners included that of following up outstanding cases.”

Mr. Mac Gearailt.—This paragraph refers to the delay in the submission of returns by persons liable to assessment for wealth tax. The Accounting Officer’s observations are included in the paragraph.

203. Chairman.—The inference seems to be that there was a staffing problem and that that more than anything else caused the delay?

—We must use the past tense now because wealth tax is no longer with us. The difficulty arose from a combination of the newness of the tax and the fact that the incidence of the work occurred at a particular time, rather than being spread over the whole year. This is a difficulty that we have which generally occurs acutely each year. It has to do with how one goes about staffing: does one maintain staff to deal at all times with peaks or average it out and say we will take one month with another and say we will have a staff which will dispose of work in a certain length of time? Here, as with all new taxes, I must say straight away we had teething troubles. One is never sure in advance how things will work out. Certain defects in administration came to light, and they have been referred to, properly, by the Comptroller and Auditor General. When they came to light we took steps to bring them into proper order. I think we were successful in this, but we will never know whether we would have been wholly successful because that tax system disappeared. What we are engaged in now is tidying up and collecting amounts that had become assessable while the tax was in operation, and that is a different kind of problem.

204. Paragraph 14 of the Report of the Comptroller and Auditor General reads:

“In the course of a test examination of cases in which remittances had been received in respect of wealth tax it was noted that delays had occurred in transferring some of these remittances from the Capital Taxes Branch to the Cash Office for lodgment to the account of the Revenue Commissioners. I sought the observations of the Accounting Officer in regard to 12 such cases in which there were delays of from one to five weeks and in which the remittances varied between £1,000 and £22,000. He pointed out that the aim of the Wealth Tax Act, 1975 is to get in tax as soon as possible, even in advance of the statutory returns, and that to achieve this it was enacted that payments on account of tax made before certain dates would attract no interest charges. This resulted in some thousands of envelopes containing cheques, and in many cases returns, being received in the Capital Taxes Branch in the week ended Friday, 5 December 1975 and again in the week before Monday, 5 July 1976. In spite of the fact that the staff worked 4 days a week overtime on both occasions it was after the middle of January 1976 before remittances received in December had been cleared and it was the end of July 1976 before remittances received during that month had been cleared. The Accounting Officer added that the Office of the Accountant General of Revenue and the Capital Taxes Branch were in consultation with a view to ensuring the immediate lodgment of remittances in respect of 1977 wealth tax payable on 5 April 1977.

I also sought the observations of the Accounting Officer in regard to two cases in which cheques for £2,400 and £4,500 received in payment of wealth tax were discovered in the course of audit on the taxpayers’ files and were only brought to account some three weeks and sixteen weeks, respectively, after their receipt. He informed me that it seemed that the files in these cases had, through an oversight, been wrongly routed after being dealt with in the Registry and before being entered in the cheques received book but that steps had been taken to ensure that this could not occur again. He added that the procedures for receiving, recording, processing and lodging remittances were being reviewed in the Office of the Accountant General and in the Capital Taxes Branch in the light of the experience gained in 1975 and 1976 and that the revised procedures would be in operation before 5 July 1977.”

Mr. Mac Gearailt.—This paragraph refers to delays in transferring amounts received in payment of wealth tax from the branch receiving the remittances to the cash office which is responsible for lodging them. The paragraph also refers to two cases where my officers when examining a selection of files in the course of audit discovered two cheques which had apparently been mislaid. The Accounting Officer’s explanations in both cases are included in the paragraph.

205. Chairman.—The Comptroller and Auditor General referred to two cheques which were not transferred to the cash office. I assume that cash would be paid directly to the cash office but that cheques might not be lodged immediately. Two cases have been mentioned, but I should like to know if other cases were found by your staff subsequent to the Comptroller and Auditor General’s perusal of the problem. I should like you to comment on the whole question of the transfer of moneys of this nature from the capital taxes branch to the cash office. It would seem to have been a rather loose system, but there may have been a staffing problem. In ordinary commercial life cash would be transferred as close as possible to the time of lodgment. Was it a cash probem or was the system working against you?

—It was mainly due to inexperience in a new area. I can reassure the Committee that we have the most stringent regulations about how cheques which come in through the post are dealt with. The regulations amount to this: whatever the contents of the letter, even if it is clear from the contents that the cheque should not have been sent in, the cheque must be sent straight away to the Accountant General and be put on deposit, even if we know there is no heading in revenue to which it properly belongs. Over the entire office this works quite satisfactorily. Perhaps once in five or six years we find somebody has not done what he ought to have done, but in general the Committee can take it that the regulations are enforced stringently—that cheques must go immediately to one of the cash offices of the Accountant General. There is procedure for entering cheques in a book, making a note on the correspondence, checking the tax liability and so on. In this case, staff had not been accustomed to receiving money with letters, and though most of them would appreciate because of their general knowledge what they must do, there would be an odd case where it would be overlooked through inexperience or because of the sheer bulk of the correspondence coming in at a particular time. We regard this work very seriously, and the strict rule in regard to remittances is that they must be got to the Accountant General immediately and put into a bank—they must not be left lying around the office. That happens except in cases where we would be prejudiced legally by acceptance of a cheque. The problem in this case arose from inexperience and because of the accumulation of a huge amount of post, some of which contained cheques. Sometimes it was to a taxpayer’s advantage to fire in a cheque without looking too closely at how much he owed, since he would escape a heavy interest charge and be repaid any excess with interest.

206. Paragraph 15 of the Report of the Comptroller and Auditor General reads:

“Section 21 of the Wealth Tax Act, 1975 provides that in any case in which an assessable person, being an individual domiciled and ordinarily resident in the State, shows to the satisfaction of the Revenue Commissioners that the combined total of the tax paid in respect of his taxable wealth on a valuation date and the income tax paid by him for the year ending on that date exceeds 80 per cent of his total income for that year the Commissioners shall repay the excess, provided the sum repaid shall not exceed 50 per cent of the wealth tax payable on that valuation date.

In the course of audit six cases were noted in each of which the wealth tax remitted by the taxpayer appeared to represent only 50 per cent of the tax due as calculated from the returns submitted. As section 21 of the Act requires that, before a refund of tax is made, the Commissioners must be satisfied that such a refund is due, I sought the observations of the Accounting Officer as to whether the withholding of tax by a taxpayer instead of claiming a refund from the Commissioners was in accordance with the provisions of the Act. He informed me that assessments for the balance of the tax due for 1975 and 1976 has been issued in three of the cases listed in my inquiry and that in the other three cases assessments had not been made. The Accounting Officer added that finalisation of the income tax liability had not been reached in any of the cases for the valuation dates in 1975 and 1976 and that the Revenue Commissioners had been legally advised that they would not succeed in an action under section 21 of the Wealth Tax Act, 1975 to enforce payment of the gross wealth tax in such cases where the control of the income tax situation was not in the hands of the taxpayer.”

Mr. Mac Gearailt.—This paragraph draws attention to cases where certain taxpayers, instead of paying as they are required to do, the full amount of wealth tax for which they were liable paid only 50 per cent tax apparently because they considered that had they paid the full tax they would be entitled to a refund of 50 per cent in any event under section 21 of the Wealth Tax Act. Because the decision as to whether a refund of tax is due is a matter for the Commissioners, having regard to the total sum paid by way of both wealth tax and income tax, I asked the Accounting Officer if the action of taxpayers in withholding 50 per cent of wealth tax payable was legal. His reply is included in the paragraph.

207. What is the present position with regard to this practice? Have any more cases come to light with regard to the payment of 50 per cent.?

—No tax comes in now on a current basis because of the disappearance of the wealth tax. We agree that the Comptroller and Auditor General is correct in law— according to the letter of the law. We found ourselves confronted with the position that we knew that the amount of wealth tax payable, to take a hypothetical case, would be £200,000, if one were to look purely at the wealth tax provision. We also knew, because we had before us income tax accounts, that the liability to the full amount of wealth tax would eventually be reduced to 50 per cent because of the amount of income tax taken along with the wealth tax, but because the income tax accounts were in our possession and were being processed by us the taxpayer was not able, according to the letter of the law, to establish his right to get his refund of wealth tax almost simultaneously with his payment of income tax. We were technically, if you like, at fault in as much as we had all the availabe information before us but the processing of the income tax accounts in the case of very wealthy people can be a very lengthy matter at times. I may mention such things as the verifying of income derived from foreign sources. We deal with this by getting payments on account so that the Exchequer is not at a total loss while the examination process is going on but the finalising of the income tax figure for a particular year can take quite a long time. We sought advice from our legal advisers as to what would happen if a taxpayer in a situation like this went before the courts with a complaint that he was being deprived—that money was being taken from him and he was getting nothing back because of a technical delay on our part—an administrative delay which we find unavoidable. We were advised that the Courts would hold that equity—and very often the Courts regard themselves as dispensers of equity as well as law—lay so strongly with the taxpayer that the Courts would hold against us. We have a general view on this not relating merely to wealth tax. that where we are given specific advice that the Courts will hold against us and award costs against us if we take a certain course of action, we do not pursue that course as we do not think it would be in the interest of our general job which is the care and management of the money. It would cost us more, in other words, and we would lose. In those circumstances we gave the person credit on the wealth tax for the amount we knew he was entitled to and would be clearly and definitively entitled to when we would finalise the figures he had given us. That is the explanation.

Deputy Woods.—That is a very comprehensive explanation.

208. Chairman.—Paragraph 16 of the report of the Comptroller and Auditor General reads:

Capital Gains Tax

In paragraph 16 of my previous report I referred to the introduction with effect from 1974-75 of a tax on chargeable gains accruing to a person on the disposal of assets. In the year under review I carried out, with satisfactory results, a test examination of the procedures for the assessment, collection and bringing to account of this tax. The yield from the tax in 1976 was £430,453 and £426,000 was paid into the Exchequer.”

Mr. Mac Gearailt.—This paragraph is for the information of the Committee and I have no further comment.

209. Chairman.—Paragraph 17 of the report of the Comptroller and Auditor General reads:

Capital Acquisitions Tax

The Capital Acquisitions Tax Act, 1976, which was enacted on 31 March 1976, provides for—

(a)a gift tax on taxable gifts taken by a donee on or after 28 February 1974 and

(b) an inheritance tax on taxable inheritances taken by a successor on or after 1 April 1975.

In the year under review a test examination of the procedures for the assessment, collection and bringing to account of these taxes was carried out with satisfactory results. The yield under both heads was £433,513 of which £428,000 was paid into the Exchequer.”

Mr. Mac Gearailt.—This paragraph also is for the information of the Committee.

210. Deputy Woods.—What is the total staff number covered by the Vote, the global figures?

—May I give you the current figures rather than the figure for the particular year? It is about 6,200. There are three main areas in the Revenue Commissioners’ Office, the general service area and two that we call outdoor offices, that is custom and excise, who operate in the field as it were and the inspectors of taxes in the different tax districts. The head office would be about 2,200; the inspectors of taxes would be about 2,300 and the outdoor customs and excise would be about 1,700. These proportions have changed over the past ten years. At one time the greater number was on the customs and excise side but with the expansion of what I might call inland taxes and the advent of sales taxation and so on which is dealt with by inspectors of taxes, the numbers in that area have escalated and outdistanced the increases in the other areas. That development was to be expected.

211. One would expect currently that inspectors in the VAT area would be on the increase?

—Yes. Currently there is on the stocks a new Directive which will tend to add to the complexity of the administration of VAT and, of necessity, I think this will mean that we will need more staff than we have at present. There is the prospect of VAT being used as a base from which the EEC will expect to derive resources and they will have an interest in how we conduct VAT and they may want closer controls than we think are necessary. We shall have to discuss with them what they feel they must have.

212. I appreciate that; I am on the Committee dealing with that Bill at the moment. In relation to the evasion of VAT, which is in many ways similar to the other areas we are discussing here I felt that might be an area which warranted careful scrutiny?

—It is an area we have very much under consideration at the moment. It is a matter which we will have to discuss with the Department of the Public Service, but currently we think more staff are needed for that purpose.

We will be hearing more about this matter, I presume.

213. Chairman.—Under the heading “Extra Remuneration (exceeding £200),” generally speaking we are asking that in future the format as presented be changed and to give the total number in receipt of overtime, but there is no need to worry about it now. The Committee’s request in this matter will be formally communicated to you. Members of the Stamping Branch received amounts varying from £201 to £3,802. That means that somebody in the stamping branch received a sum of £3,802 overtime payment.

—I suggest that that officer works in the Computer Centre and not in the Stamping Branch.

The Computer Centre?

—Yes, and this is a special case. In the Computer Centre certain officers have a high degree of technical expertise. In the year under consideration certain new tasks were laid to us. The specialisation required was almost entirely concentrated in the computer area. As well as overtime there, there are what are called shift allowances and between the two we were obliged to ask —and I have to put it that way—this young lady to agree to work what I would regard as totally excessive hours to get the job done by a deadline. I would hope that extra work on that scale would never happen again.

Would it be common?

—No, it was a particular thing.

I thank Mr. Richardson for his comprehensive replies to points raised by the Committee.

The witness withdrew.


Mr. J. C. Holloway called and examined.

214. Chairman.—Paragraph 47 of the Report of the Comptroller and Auditor General reads:

Subhead I.3.—Industrial Development Authority—Grant for Industrial Housing

Prior to May 1976 industrial housing was provided by the National Building Agency Ltd. at the request of the Industrial Development Authority out of the Agency’s own financial resources and the Authority paid vacancy rents to the Agency for houses not taken up by industrial workers. In May 1976 the Government decided that the Industrial Development Authority would be responsible in the future for the financing and provision of industrial housing for new industry out of funds to be made available to the Authority and provision was made by way of supplementary estimate for the issue of repayable grants to the Authority for this purpose. The administrative arrangements entered into in order to give effect to the Government decision provided that the grants paid from the Vote would be repaid with interest by the Authority out of the proceeds of the sale of houses. Of the sum of £538,121 issued to the Industrial Development Authority from Subhead I.3. under these arrangements, £362,161 was used by the Authority to pay vacancy rents on houses provided by the National Building Agency Ltd. under the arrangements existing prior to May 1976. As stated in a note to the account £362,161 together with interest of £10,121 was repaid to the Department in March 1977 and brought to account as appropriations in aid.”

Mr. Mac Gearailt.—This paragraph is for information. A supplementary estimate of £600,000 was taken in December 1976 to provide a repayable grant for the IDA to defray the cost of providing industrial housing. As indicated in a note to the account, the sum of £538,121 issued out of this subhead included an amount of £362,161, in respect of vacant rent payments made to the National Building Agency which up to May 1976 had been responsible for the provision of industrial housing to meet IDA requirements. As stated in the paragraph, this sum of £362,161 was repaid to the Department with interest by the IDA in March 1977 and appropriated in aid of the Vote.

215. Chairman.—The sum of £600,000 was granted in respect of provision of industrial houses by the IDA and more than half of this sum was expended in repayment of vacancy rents. Am I right in suggesting that this sum was not meant for this purpose?


May I say that as a result this was repaid with interest but this sum was not meant to be spent for the purpose of vacancy rents?

—It is quite correct. But some extenuation for the accounting here is needed for the IDA. You have to bear in mind that the idea of payments to cover vacancy rents was not new at that time. It had been going on through a different account in a different form for a number of years and we now have it under a separate subhead, so perhaps one could regard this as being an error of a mechanical kind. It was put into the wrong account, it was subsequently regularised, and in order to ensure that this kind of thing did not happen again it was decided to have a separate subhead. These vacancy rents are now specifically provided for and I do not think it could happen again. The Chairman is right in saying that the sum of £600,000 was not intended for that purpose. You could go on to say that the estimate of £600,000 was obviously too high because they did not need a substantial portion of it. The explanation is that there had been a very substantial decision to change the responsibility for housing from the NBA to the IDA themselves and it was very difficult for them to settle on the precise sums that they might need.

216. So the solution is to have this under a separate subhead. I am not suggesting that there is a misappropriation of funds. It is probably tidier bookkeeping to have it under a separate subhead?


217. Deputy Belton.—On subhead C.— Advertising and Publicity—the expenditure seems to be a great deal less than granted in that case.

—Most of the saving arose from the fact that there was a substantial provision made for advertising in relation to metrication. There was a slowing down in that programme for reasons outside our control. The programme regained momentum in subsequent years. You will find that the expenditure in 1977 was nearer to the provision made.

218. Chairman.—On subhead D.—Geological Survey—Equipment, Stores and Maintenance—is that purely for equipment, stores and maintenance?


219. Deputy Woods.—On subhead G.— International Organisations—the supplementary of £86,000 does not seem to have been used?

—The difference is made up of a substantial item which we had contemplated in respect of the European Space Agency. The necessary agreements and other documentation in relation to that were not finalised in sufficient time to enable the expenditure to be made.

In effect, it went into the following year?

—That is right.

220. On subhead I.2.—Industrial Development Authority—Capital Expenditure (Grant-in-Aid)—is it known in advance that a Supplementary Estimate is not necessary?

—It was known at that stage that we were not going to need all of the money provided for. It was transferred to other purposes.

221. On subhead K.2.—Credit Financing of Certain Capital Goods Exports—would that be interest charges?

—It is the provision of capital for export business of a particular category at subsidised rates. Some element of the subsidy is borne by the banks but they would not agree to carry it all, and there is an arrangement under which part of the cost of the subsidy is borne by the State.

That amount is actual interest paid on such arrangements?

—That is right.

222. On subhead T.—Investment in Mining Concerns—was the sum of £3 million granted in expectation of investment in mining concerns which did not take place within the year?

—That is correct.

223. Where did that £3 million go? Was it shifted around within the vote?

—No. If it did not happen that year it would be in the accounts for the following year. It was a question of timing. It did not mature for payment within the year provided for so it had to be paid the following year.

I was wondering where the £3 million goes?

—It was transferred as a saving and reduced the amount that would have been asked for by way of Supplementary Estimate.

224. Chairman.—Under the heading Extra Remuneration, we have been requesting that the format be changed slightly to include the total number of people in receipt of overtime, regardless of whether they receive more than £200. The Committee are conscious of the position obtaining in regard to unemployment and are anxious that wherever possible new jobs will be created. Where sums for overtime amount to the total involved in this case it would appear there might be scope for extra jobs.

—I am not at all happy about the amounts spent on overtime in the Department. I should be much more pleased if we could get approval for additional heads of staff and thereby give additional employment and reduce overtime payments—and get better value for money.

225. Deputy Woods.—At which levels does overtime occur? I understood certain officers do not receive overtime.

—That is the case. Until recent years the level at which overtime was payable was quite low. It stopped at the level of clerical officer and there were many thousands of people in the Civil Service who under that regime were expected to work late for nothing. Staff associations then became trade unions, they became more demanding and said they did not see why people should be asked to work for nothing. Executive Officers and Higher Executive Officers became entitled to overtime in rather restricted circumstances. Staff generally are enjoined to minimise overtime commitments.

I appreciate overtime would be necessary in certain circumstances.

—A lot of our overtime at the moment is on security people and work of that kind.

The witness withdrew.


Mr. P. L. Ó Réagáin called and examined.

226. Chairman.—Paragraphs 48, 49, 50 and 51 of the Report of the Comptroller and Auditor General read:


A test examination of the store accounts was carried out with satisfactory results.

In addition to the engineering stores shown in Appendix II as valued at £9,847,256 at 31 December 1976 engineering stores to the value of £109,478 were held on behalf of other government departments. Stores, other than engineering stores, were valued at £2,033,275 including £758,737 in respect of stores held for other government departments.

Including works in progress at 31 December 1976 the expenditure on manufacturing jobs in the factory during the year amounted to £204,236, expenditure on repair-work (other than repairs to mechanical transport) to £320,836 and expenditure on mechanical transport repairs to £61,587.


A test examination of accounts of postal, telegraph, and telephone services was carried out with satisfactory results. The net yield of revenue for the years 1976 and 1975 is shown in the following statement:—







Postal service



Telegraph service



Telephone service






£90,000,000 was paid into the Exchequer during the year leaving a balance of £1,720,489 at 31 December 1976. Sums amounting to £97,861 due for telephone services and £4,157 for telegraph (telex) services provided in previous years, were written off during the year as irrecoverable. I have made a test check of the amounts written off with satisfactory results.

Post Office Savings Bank

The accounts of the Post Office Savings Bank for the year ended 31 December 1976 were submitted to a test examination with satisfactory results. The balance due to depositors, inclusive of interest, amounted to £307,527,218 (including £102,093,775 in respect of liability to Trustee Savings Banks) at 31 December 1976 as compared with £265,843,706 at the close of the previous year. Interest accrued during the year on securities standing to the credit of the Post Office Savings Bank Fund amounted to £27,392,249. Of this sum £22,594,596 was applied as interest paid and credited to depositors, management expenses absorbed £2,208,043 and the balance £2,589,610 remained as a provision against depreciation in the value of securities.

Exchequer Extra Receipts—Relay Licence Fees

Licences are issued under the Wireless Telegraphy (Wired Broadcasting Relay Licence) Regulations, 1974 in respect of the provision of cable television service in defined areas. The regulations provide for the payment by a licensee to the Minister for Posts and Telegraphs, on the last day of each quarter, of a fee equal to 15 per cent. of the gross revenue, excluding installation charges and value-added tax, paid to the licensee in that quarter in respect of the relay service provided. Under the regulations a licensee is required to furnish annually an audited statement of such gross revenue received each year.

In the course of audit it was observed that some licensees had paid over fees but had not submitted audited statements of the gross annual revenue and that others had neither paid fees nor submitted audited statements. I sought information from the Accounting Officer in the matter. He has informed me that at the date of his reply, 15 June 1977, licences had been issued to twenty-six licensees. Six of these were no longer operating, one having gone into liquidation and five having had their licences transferred to other licensees. Where audited statements had not been submitted or where fees had not been paid reminders had been issued to the licensees and consideration was being given to the further action to be taken.”

Mr. Mac Gearailt.—Paragraph 48 is for information. It reports to Dáil Éireann that the store accounts kept by the Department of Posts and Telegraphs were audited by my office in 1976 as required by statute.

Paragraph 49 reports to Dáil Éireann that accounts of the revenue from Post Office Services for the year 1976 were examined with satisfactory results. The net yield of revenue from each of the three services in the year is also given together with the comparative figures for the previous year.

Paragraph 50 gives information on the operations of the Post Office Savings Bank for the year 1976 including the balance due to depositors at the year end which showed an increase of £41,683,512 over the amount due at the close of the previous year.

Paragraph 51 draws attention to the fact that certain cable television licence holders had failed to submit audited statements of gross revenue in support of the fees paid by them to the Minister for Posts and Telegraphs and that other licence holders had neither paid fees nor submitted audited statements. Information furnished to me by the Accounting Officer as to the position in May 1978 indicates that, while the problem was still an ongoing one, certified statements had since been received from a number of the licence holders concerned and that proceedings were being instituted in three cases where fees had not been paid.

227. Deputy Woods.—Are these fees due from the wholesalers?

Mr. Mac Gearailt.—From the cable companies.

Deputy Woods.—I am told there would be many cases where licence fees from individual householders are not collected because their TV sets come in without VAT being charged as they come through irregular channels. The cable companies could be a means of catching such evasion. Even if people got their sets outside normal channels, many of them would still apply to cable companies to be connected. There has been a lot of discussion on this recently, for instance at the VAT Special Committee.

—I think it is fairly well known that we carry out a campaign most years to try to catch TV licence defaulters. A fairly steady effort is made to catch these people.

228. Chairman.—The latest report would seem to suggest something in the region of £1.5 million in default, a fairly substantial sum when you consider the total revenue from licences is about £10 million; it is about 14 or 15 per cent. I appreciate the efforts you are making. Are you going to initiate any new ideas in this context?

—It is a continuous process. We have had a campaign each year and we manage to catch considerable numbers of defaulters each time. It is one of these problems we must keep on trying to resolve. It is a pretty difficult one since sets come into the country in all sorts of ways. It is not easy to track down people except by house to house visits. We try, as an ongoing process, to encourage people by television advertising and so on to take out licences.

229. Deputy Woods.—I presume there are a number of ways of detecting defaulters. I have been made aware of one about which I had not thought but I have not been dwelling too much on the problem. This one was mentioned here: the cable service people who provided community aerials. I presume their services are becoming increasingly valuable with the variety of channels available. So, that is obviously a good source. There are also retailers who are selling and the matter of the VAT system. Could you give some idea as to how you see the current effectiveness of the different methods? The question raised by the Comptroller and Auditor General related to cable television licensees. What proportion has been brought into the net at this stage? Are there many outstanding? As the Chairman said, there is a fairly substantial amount of money involved.

—The estimate of defaulters is of course an estimate and we cannot establish with certainty what the number is. If we could, we would expect to collect the licence fees from those concerned. I do not think there is much I can add to what I have said, except that we are keeping on with this job and doing all we can to collect licence fees wherever possible.

230. I understand from people in the business whom I have heard making submissions in regard to VAT that it is a situation that is worsening rather than otherwise because they feel a fair number of sets will be coming in through, let us say, irregular channels. It struck me that there are different methods. The retailer is involved if he can be located——

—I think we have quite good information from that source.

The general trade is fairly sound in that regard?


231. I presume this is the Department with the greatest number of staff in the State service in total. Approximately what is the current number?

—The current number is around 28,000. It is difficult to give an exact figure because we always have a fringe of temporary and casual people and so on.

232. In regard to Subhead F—Engineering Stores and Equipment—I wish to refer very briefly back to the Comptroller and Auditor General’s point that an inventory was made to establish the position of these stores. It certainly gives one great confidence to have a survey done of these very extensive stocks and to find that they are reasonably in order because I am sure that would not have been the view in the public mind. I certainly gained considerable reassurance from the fact that the Comptroller and Auditor General can guarantee that to us and I should like to compliment the Department in that respect.

Chairman.—And I should like to thank the Department for furnishing us with a very comprehensive document.

233. Deputy Woods.—On subhead I— Losses—what precisely is provided for under this subhead?

Mr. Mac Gearailt.—It is a write-off.

Deputy Woods.—What would one be writing off? Is it capital?

Chairman.—They are all listed on pages 138 and 139, including robberies.

Deputy Woods.—But is it standard practice to include in advance a sum for losses?

—Obviously, it is something we must provide against.

Chairman.—I must say that the estimate was not that far out; it was quite accurate.

Deputy Woods.—I am not querying the estimate, but when you deal with other Departments you do not have a heading for losses. It is just in the nature of the business, obviously, something for which one must make a regular allowance.

234. Chairman.—On subhead K.1—Commissions and Special Inquiries—I should like to ask about a note under that subheading about over-estimation of expenses of the Post Office Users’ Council. Does that cover anything else apart from expenses in respect of the members of the council.

—The over-estimation refers to the provision we made for the expenses in respect of members of the Council.

The subhead covers nothing else but that?

—That is all.

235. Deputy Belton.—On subhead K.2— Consultancy Services—the figure is very low, less than 40 per cent of the amount granted. The note just says that expenditure on the employment of consultants in connection with a new main accounting system was less than expected. Obviously, it was much less but why was it so much less?

—To some extent we are dependent on the progress made by the consultants at any particular time, the number of people they have on the job and so on. We had hoped for more progress than in fact was achieved in that year. It is an on-going business.

Chairman.—There will be a carry-over?

—It will be carried over into the next year.

236. Subheads L1, L2 and L3, deal with RTE. This matter came before the House in another context recently.

237. On subhead T—Appropriations-in Aid—there was a deficiency of £3,727,188 on the amount realised. How did that arise?

238. Deputy Woods.—Where would the deficiencies be mainly here?

—It arises mainly on T.1—Recovery in respect of Telephone Capital expenditure. Telephone capital expenditure is recovered by way of an Appropriation in Aid and when we spend less than we originally expected there is a short-fall in the Appropriation in Aid.

239. Is Telephone Capital expenditure accounted for as an Appropriation in Aid?

—Yes, the money for Telephone Capital expenditure is raised by the Minister for Finance under the Telephone Capital Acts. We show expenditure under the main Vote subheads but the total amount is recovered by way of an Appropriation in Aid.

240. Chairman.—Under the heading “Loss of Stores”, the amount of postal stores lost from stock amounted to £90. The Department must be complimented on the very small loss incurred there. It would indicate a high degree of efficiency in supervision.

—Thank you, Mr. Chairman.

241. The Committee request that in future a change be made in the format of the information provided under the heading “Extra Remuneration” and that the total number of people in receipt of overtime payment be mentioned. We are not asking for a note on it now, but in future perhaps you could do that. We are, as I am sure you are, conscious of the need to create employment where possible. Overtime payments ranged from £201 to £5,137 in respect of extra attendance and other duties. Would the Accounting Officer tell us the type of person who might be in receipt of that kind of overtime payment?

—The people earning the highest overtime generally are engineering workmen. They are mainly among the people employed on maintaining exchange equipment or occasionally maintaining priority installations such as hospitals and so on. The first half dozen on the list of recipients of highest overtime payments are all technicians employed on exchange maintenance. Under the arrangements negotiated with the unions, overtime at the weekend generally is extremely expensive and if a man is called out two or three times over the weekend he can build up a considerable entitlement to overtime payment.

242. What would be the basic salary of a person who receives £5,137 in overtime payment?

—I am not sure, but it could be £70 to £80 per week.

Then he was in receipt of more than 100 per cent overtime?

—Yes, as I mentioned it arises mainly on the telephone side in connection with exchanges. For instance, if a man is called out for even a quarter of an hour at the weekend for an emergency, he is, under the agreement with the union, entitled to three hours overtime for that. If he is required at an important exchange or for an important priority installation like a hospital he could have a number of call-outs over a weekend. We are conscious of the cost but it is really unavoidable because of the nature of the service.

I thank Mr. Ó Réagáin for his attendance and comprehensive replies to our questions.

The witness withdrew.

The Committee adjourned.

*Includes £810,661 duty deferred under EEC Regulations (1975 £1,085,231).

†Includes £282,223 tax deferred under EEC Regulations.

‡Includes £199,850 levies deferred under EEC Regulations (1975 £91,710).

£1,224,998,000 was paid into the Exchequer during the year leaving a balance of £2,973,410 as compared with £6,289,414 at the end of the previous financial year.