Committee Reports > List of Committees > Dáil > 1990 > Committee of Public Accounts > Final Report - Appropriation Accounts 1988

AN COISTE UM CHUNTAIS POIBLÍ

(Committee of Public Accounts)

Déardaoin, 5 Aibréan, 1990

Thursday, 5 April, 1990

The Committee met at 11 a.m.

Members Present:

DEPUTY G. MITCHELL in the chair

Mr. P. L. McDonnell (An tArd Reachtaire Cuntas agus Ciste) called and examined.

VOTE 9 — OFFICE OF THE REVENUE COMMISSIONERS.

Mr. P. Curran called and examined.

Chairman.—The Committee of Public Accounts are resuming their examination this morning of Mr. Philip Curran, Chairman of the Revenue Commissioners, in his capacity as Accounting Officer for that Department. We resume on paragraph 24 of the 1987 Accounts. We then move on to the 1988 Accounts. You are very welcome, Mr. Curran.

Mr. Curran.—Thank you, Chairman.

Chairman.—With regard to paragraph 24 of the 1987 accounts, we have already examined this. It was agreed at the last examination that the Chairman of the Revenue Commissioners, the Comptroller and Auditor General and myself would meet in relation to this paragraph. There were certain matters which were sub judice and which have not been resolved in relation to an individual who is not at work and is at present on half pay. Since the matter has not been resolved I propose to note it now and ask Mr. Curran to send a detailed note to the Committee when the matter has been finalised. Is that acceptable?

Mr. Curran.—Yes, I can do that.

Chairman.—Paragraphs 17 to 20 of the Report of the Comptroller and Auditor General read:

Revenue Account.

17. An Account showing all revenue received and paid over to the Exchequer by the Revenue Commissioners is furnished to me annually. I am required under Section 2 of the Exchequer and Audit Departments Act, 1921 to carry out such examination as I think fit with respect to the correctness of the sums brought to account and to report to Dáil Éireann on the results of my examination when reporting on the Appropriation Account for the Office of the Revenue Commissioners. A test examination of the transactions shown in the Revenue Account has been carried out with generally satisfactory results.

I am also statutorily required to examine the account on behalf of Dáil Éireann in order to ascertain that adequate regulations and procedures have been framed and are being implemented to secure an effective check on the assessment, collection and proper allocation of revenue. The following paragraphs refer to matters arising from this examination.

18. The net yield of Revenue for the years 1988 and 1987 under its main headings is shown in the following statement:—

Extra-Statutory Repayments.

19. Extra-statutory repayments were made during the year of excise duties £133,127 (in respect of diplomatic privilege), value-added tax £430,019 (£137,977 in respect of diplomatic privilege and £292,042 in respect of EC Bodies) and stamp duties £21,753 (mainly in respect of lost stamped deeds).

Write Offs.

20. I have been furnished with schedules of losses of £100 or more in which claims under the Revenue Acts were written off without statutory authority during the year ended 31 December 1988.

The total amount of the items included in the schedules £13,097,362 is made up as follows:—

The distribution according to the ground of write off is:

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

Mr. McDonnell.—Paragraphs 17 to 20 are standard. Firstly, paragraph 17 sets out the scope of my statutory function in relation to the audit of revenue. Paragraphs 18, 19 and 20 give various statistics and details on the net yield of revenue under the main headings. They give details of extra statutory repayments, cases written off in 1988 under each tax head and the amount involved. You will see, for instance, from paragraph 20 that the amount written off in 1988 was down on the amount written off in 1987. But, as the Chairman says, they are standard paragraphs. Do you want me to go on to paragraph 21?

Chairman.—We will take paragraph 21 separately. On paragraphs 17 to 20 there was a sizeable increase in the tax take in 1988, up a little over £810 million on the previous year. What is the main reason for that? If you look at the yield for the year 1988, in paragraph 18, the most significant increase was under the heading of excise and income tax. Was that part of the tax amnesty?

Mr. Curran.—Certainly, the tax amnesty would have accounted for some of it on the income tax side and the inland revenue side. On excise, which also showed a sizable increase, it was accounted for simply by more expenditure on excise commodities.

Chairman.—Would that level of increase in one year be reasonably normal or would it be exceptional?

Mr. Curran.—I would not regard it as very exceptional. Excise went up from £1,389.3 million to £1,483.21 million.

Chairman.—I was speaking of the overall increase of about £810 million in one year.

Mr. Curran.—That was an exceptional increase, because £500 million of it would have been due to the tax amnesty. We would regard that as an exceptional increase.

Chairman.—In paragraph 19 I note that:

Extra-statutory repayments were made during the year of excise duties £133,127 (in respect of diplomatic privilege), value-added tax £430,019 (£137,977 in respect of diplomatic privilege) and £292,042 in respect of EC bodies…

What is the refund in terms of EC bodies and diplomatic privilege?

Mr. Curran.—The bulk of those would be items subject to excise duty and VAT which diplomats are entitled to receive without payment of these taxes and duties. The machinery used to exempt diplomats from these charges is by way of extra-statutory repayment.

Chairman.—If a diplomat purchases a television and pays VAT they subsequently submit this to your office and you arrange a refund?

Mr. Curran.—That is correct.

Chairman.—Would our diplomats abroad have the same privilege?

Mr. Curran.—That is correct.

Chairman.—You have not thought of extending this to Members of the Oireachtas?

Mr. Curran.—I daresay somebody has thought of it.

Chairman.—Any questions in relation to these paragraphs?

Deputy Connor.—My point relates to paragraph 20 and schedule of losses. If I may quote:

I have been furnished with schedules of losses of £100 or more in which claims under the Revenue Acts were written off without statutory authority during the year up to 31 December 1988.

The use of the words “without statutory authority” worries me somewhat. Might I seek elucidation?

Mr. Curran.—There is no statutory authority whereby we are allowed to waive collection of tax. When we are faced with a situation where despite our best endeavours it is just physically impossible to collect it we are left with no alternative but to say that we have done our best but we just cannot collect it. That is another way of saying that it is written off. What that means is we write these things down on a schedule and we furnish this to the Comptroller and Auditor General. We say there is no point in doing anything more with these because we cannot collect it. There is no specific statutory section which says that this is the procedure you follow. Probably it is founded on common sense.

Chairman.—There is also a section in the guidelines on financial procedures dealing with it — I can read it if you wish, but it more or less says that it should be brought to the attention of the Dáil if there is no statutory backing for it.

Deputy Connor.—In answer to the Chairman, Mr. Curran, you stated that quite a good deal of the increase in revenue would be accounted for by the tax amnesty. To what degree would you say the increase in revenue would be attributble to better collection because of the use of revenue sheriffs?

Chairman.—We will be coming to that question. I will allow Deputy Connor in first when we get to that stage. Did Mr. McDonnell want to say something about the write-offs?

Mr. McDonnell.—Not really except to say that perhaps Deputy Connor may have drawn the inference that since these were written off without statutory authority, there were others which were written off with statutory authority. That was not intended to be the inference in the preamble.

Chairman.—Can we note these paragraphs?

Deputies.—Yes.

Chairman.—Paragraph 21 of the Report of the Comptroller and Auditor General reads:

Assessment and Collection

The Revenue Commissioners have furnished me with the following schedules and footnotes thereon relating to the assessment and collection of taxes and the collection of PRSI, health contributions, employment and training levy and income levy.

Tax shown in Schedules 1 and 4 as being under appeal does not become due until final determination of the appeal, provided an amount specified by the taxpayer has been paid (the taxpayer may specify that no tax is payable). With regard to the year of account 1988/89 much of the tax shown as outstanding is the subject of appeals made within the normal time limits following the making of assessments or the revision of assessments on submission of self assessment returns (see also paragraph 22). In paragraph 19 of my previous Report I referred to the incentive provided in Section 72 of the Finance Act, 1988 to taxpayers to bring their tax affairs up to date. The incentive provided for the waiver of certain outstanding interest charges and penalties in respect of tax arrears. The Revenue Commissioners have attributed a yield of £497 million to the incentive and related measures and have estimated the break-down of this amount as follows:

These amounts are included in the figures shown in the relevant schedules.

Schedule 1 — Income Tax (excluding PAYE)

(as at 31 May 1989)

(a) *This charge has been reduced by £18 million assigned in error to the 1987/88 year of account by the computer system as at 31 May 1988 but transferred to the correct year of account, 1988/89, in August 1988.

(b) **While the amounts were not, at 31 May 1989, disputed, it is likely that a significant portion will be subject to claims for the admission of late appeal or revision of submission of returns under Self Assessment for 1988/89.

(c) Deposit Interest Retention Tax which was introduced in 1986 is included in the figures for all years to 1986/87, 1987/88 and 1988/89. It accounts for £257 million of the charge, net charge and paid amounts for all years to 1986/87. for £269 million of the corresponding figures for 1987/88 and for £193 million of the corresponding figures for 1988/89.

(d) Withholding tax on fees paid for professional services, which was introduced in 1987 is included also in the figures for 1987/88 and 1988/89. It accounts for £35 million of the charge, net charge and paid amounts for 1987/88 and for £64 million of the corresponding figures for 1988/89.

(e) PRSI for the self-employed, which was introduced in 1988, is also included, along with Health Contributions and the Employment and Training Levy, in the figures for 1988/89. Together they account for £60 million of the charge and net charge and £35 million of the paid amount for that year.

(f) ***It should be noted that the difference between the balance and estimate of amount likely to be collected is largely accounted for by anticipated reductions of estimated assessments included in the balance.

(g) A levy on Pension Funds was introduced in 1988 — Section 53 of the Finance Act, 1988. The levy accounts for £13 million of the charge, net charge and paid amounts for 1988/89.

Schedule 2 — PAYE Income Tax

(Tax due from Employers)

Income Tax collected under the PAYE system and included in the amount of income tax collected as shown in paragraph 18 amounted to £2,279 million.

(a) The arrears outstanding at 31 May 1989 amounting to some £107 million represent only actual underpayments established and do not include demands made on the basis of amounts estimated to be due.

As end-of-year returns from employers were not due to be furnished until 30 April 1989 there was no significant underpayment established for the year 1988/89 as at 31 May 1989.

(b) Section 8 of the Finance Act, 1968 provides that where the Revenue Commissioners have reason to believe that an employer has failed to state his full liability for PAYE for a year, they may estimate the amount of PAYE due for that year. The following schedule shows the position of such estimates as at 31 May 1989:

Notes:

(i) Estimates: Estimates raised by the Inspector of Taxes represent gross liability and will therefore in each instance include amounts accounted for on any return submitted for the year covered by such estimate. These estimates are subject to appeal by the employer and should not be taken to represent final liability.

(ii) Paid: Includes tax paid before the estimate was raised as well as amounts paid subsequently.

Schedule 3 — Pay-Related Social Insurance

(Amounts Due from Employers)

The collecton of Pay-Related Social Insurance (which includes the Employment and Training Levy and the Health contribution) for PAYE employees is integrated into the tax collection system and £1,273 million was collected during 1988.

(a) The arrears outstanding at 31 May 1989 amounting to some £126 million represent only actual underpayments established and do not include demands made on the basis of amounts estimated to be due.

As end-of-year returns from employers were not due to be furnished until 30 April 1989 there was no significant underpayment established for the year 1988/89 as at 31 May 1989.

(b) Section 8 of the Finance Act, 1968, as applied to PRSI by various legislation, provides that where the Revenue Commissioners have reason to believe that an employer has failed to state his full liability for PRSI for a year, they may estimate the amount of PRSI due for that year. The following schedule shows the position of such estimates as at 31 May 1989:

Notes:

(i) Estimates: Estimates raised by the Inspector of Taxes represent gross liability and will therefore in each instance include amounts accounted for on any return submitted for the year covered by such estimate. These estimates are subject to appeal by the employer and should not be taken to represent final liability.

(ii) Paid: Includes PRSI paid before the estimate was raised as well as amounts paid subsequently.

Schedule 4—Corporation Tax (as at 31 May 1989)

(a) *While the amounts here were not, at 31 May 1989, disputed it is likely that a significant portion will be subject to claims for admission of late appeal.

(b) †It should be noted that the difference between the balance and the estimate of amount likely to be collected is largely accounted for by anticipated reductions of estimated assessments included in the balance.

(c) **The balance for 1988/89 includes £95 million which was not yet due at 31 May 1989. Since it became eligible for demand within two months after that date, it is included as usual under heading (3) in the analysis above.

(d) Advance Corporation Tax is included in this schedule. It accounts for £43 million net charge and £43 million paid for all years to 1986/87, £37 million net charge and £36 million paid for 1987/88 and £53 million net charge and £52 million paid for 1988/89.

Schedule 5—Capital Gains Tax (as at 31 May 1989)

Schedule 6—Capital Acquisitions Tax (as at 31 May 1989)

Schedule 7 — Sur-Tax, Corporation Profits Tax and Wealth Tax

(as at 31 May 1989)

The taxes referred to in this schedule have been abolished.

Schedule 8 — Health Contributions, Employment and Training Levy and Income Levy* (self-employed individuals and individuals with investment only.)

(as at 31 May, 1989)

Schedule 9 — Value Added Tax (as at 31 May 1989)

(a) The following schedule shows the position as 31 May 1989 of VAT liabilities declared and payments made on foot of returns submitted by traders.

(b) Section 23 of the Value Added Tax Act, 1972, as amended, provides that where the Revenue Commissioners have reason to believe that a person when submitting his return understates his VAT liability or obtains an excess VAT repayment or where a person fails to register for VAT they may estimate the amount of VAT due. The following schedule shows the position of such estimates as at 31 May 1989.

Notes:

(i) Estimates: Estimates raised by the Inspectors of Taxes represent gross liability and will therefore include amounts accounted for on any return submitted for the period covered by such estimate.

(ii) Paid: Includes tax paid before the estimate was raised as well as amounts paid subsequently.

(c) The following schedule shows the position as at 31 May 1989 in respect of estimates raised by the Collector-General under Section 22 of the Value Added Tax Act, 1972, where taxable persons have failed to furnish statutory returns by that date. The amounts paid represent estimates paid without submission of returns. The balances outstanding are not a measure of equitable liability and cannot, therefore, be taken as a measure of arrears of tax. Many of the outstanding returns may show little or no liability when furnished. Some may prove to be claims to repayments. While the returns remain outstanding it is not possible to quantify the liability other than by the process of making estimates.

Schedule 10 — Residential Property Tax

(as at 31 May 1989)

The following schedule shows the amount outstanding at 31 May 1989 in respect of case where returns have been made or assessment made in the absence of returns.

Mr. McDonnell.—Paragraph 21 is certainly the longest single section of my report. It comprises all these schedules, notes and so on. It sets out the collection position under the various tax heads and, indeed, under the other areas for which the Revenue have responsibility — PRSI, health contributions, levies and so on. At the beginning it also refers to the tax amnesty in 1988. There is an analysis provided there showing how the Revenue break down the yield from the amnesty, of just under £500 million. By comparison with previous years there is also a little bit of extra information in Schedules 2 and 3. We have added a schedule to show the estimated charges raised by the Revenue where they had reason to believe that employers failed to state their full liability, that is for PAYE income tax and PRSI.

I want to sound a note of caution: people may tend to run all these figures and tables together. If they do they will come up with some very large figures. One would come up with a figure of something like £3.5 billion tax which the Revenue have on their books as being due. I want to warn the Committee of the danger of doing so. I am sure the Accounting Officer will be doing this too. A lot of that is made up of estimated assessments. If Members look at the bottom line in each Schedule they will see what the Revenue estimate as being likely to be collected. If one wanted to add all those together one would have a total of something like £570 million. Having said that I am wondering whether it might be better to proceed on the basis of taking each schedule separately, rather than try to consider paragraph 21 in its totality. I do not know what way you want to proceed, but it might be better just to take the Schedules, as they are numbered one by one.

Chairman.—We will do that. We will start by taking the paragraph first. In this paragraph the preamble to the Schedules says that the amount collected was £497 million in 1988. Was that the total amount collected as a result of the amnesty or did further amounts come in after the close of the year?

Mr. Curran.—That is the total which we think is attributable to the amnesty during 1988. A small amount would have come in in the early months of 1989. It was something of the order of perhaps £30 million, from recollection. This in fact was money which the sheriffs had and which they paid over to us in January and February of the following year. That will be shown of course in the following year’s accounts.

Chairman.—So the amnesty brought in something of the order of £527 million at the end of the day?

Mr. Curran.—Yes.

Chairman.—You told us on the last occasion that about three — fifths of the money was known and about two — fifths was new money or money that you were not sure about. In fact, three-fifths of the £527 million approximately would have been money that you knew was due to the Revenue but the other two-fifths — £200 million — is money that was newly disclosed as being due.

Mr. Curran.—That is right. That is money which we think we would never have got without the amnesty.

Chairman.—A breakdown of the amnesty as between income tax and the other taxes is given, income tax being the lion’s share. Are there any other taxes, duties or excise, where you feel a declaration of an amnesty would have a similar effect?

Mr. Curran.—No, I do not think so, because the amnesty related to what we might call the assessed taxes generally. The excise and the customs taxes run on an entirely different basis. The basic position is that you should never have any such thing as an arrear of excise or customs. The system works on the basis that traders cannot get their hands on the goods until they have either paid or secured the excise duty or the VAT. It operates in a different way. I do not think there would be any scope for anything like an amnesty in that area.

Chairman.—Are there any questions on the amnesty or Schedule 1?

Deputy M. Ahern.—On the point that you made, Mr. Curran, are there any arrears in the inheritance tax area?

Mr. Curran.—The chief thing about the capital taxes area, the inheritance area, is, first of all, that we think the money would not be very great, it is a small amount but, second, it gets involved in very complex questions of probate and administering of estates and sometimes it can go back a very long time. There is a basic security there for the State because even if these taxes are not paid on the due date, there is a continuing charge on the estate so that there is a form of security and in the end the tax and interest can be collected. We do not feel that there is any great scope for an amnesty approach in that area.

Chairman.—Under the heading of Income Tax (Non PAYE), presumably that is only Schedule D, case 1 and 2, and does not include the other cases of Schedule D, or does it?

Mr. Curran.—It includes all the cases, cases 3, 4 and 5 as well.

Chairman.—Interest rents and everything else?

Mr. Curran.—Yes.

Deputy Connor.—In relation to the paragraph covering PRSI for the self-employed which was introduced for certain categories, particularly farmers, in 1988, there was a lot of complaint by the health boards that they were unsuccessful in collecting these levies from farmers, and possibly others, as it operated prior to that. Have the Revenue Commissioners been any more successful in collecting a greater proportion of these levies?

Mr. Curran.—The short answer is yes, for two reasons. First, these things are now combined with the tax collection machinery so that we are successful in collecting them as we collect our tax; it is all the one remittance. Second, we got quite a lot of money at the time of the amnesty because in order to avail themselves of the amnesty, taxpayers had to bring all their affairs up-to-date, not just the income tax but the levies as well. We collected some arrears there as well. The collection in that area is on a much firmer footing than it was.

Deputy McGahon.—In relation to the collection from the self-employed, obviously you were aided to a large extent in its success by the recruitment of quite a large number of personnel, much more so than other Departments. Has the self-assessments sector paid for itself?

Mr. Curran.—I am not quite sure. I could answer it in this way perhaps. First, we did at a certain stage get an injection of staff into the Collector-General’s Office specifically to help with the aftermath of the amnesty and the self-assessment system because there was no point in bringing in a new system unless you ran it properly and enforced it and showed people that you were going to keep it up-to-date. If you are asking if this extra allocation of staff paid for itself, the answer is it certainly did. I would say ten times over.

Deputy McGahon.—The other question I would like to ask is in relation to Border taxes and excise duties. How much did that contribute to the Revenue last year?

Mr. Curran.—The excise total receipts in 1989 came to £1,637 million, and customs came to £132 million. Some of that excise would have been internal excise. I do not have the breakdown here immediately but I could say that in a general way the excise receipts breakdown was about 50:50 as between imports and exports. Applying that, you could say that the Border taxes brought in about, say, £1 billion to round figures in 1989, if that was your question.

Deputy McGahon.—Is it possible even to hazard a guess at what we lose in the smuggling area?

Mr. Curran.—No, Deputy, I am sorry. This is the sort of question that comes up repeatedly and our stated position is that we cannot estimate the extent of smuggling. Various people are prepared to hazard guesses but officially the Revenue Commissioners do not.

Chairman.—I think it would be fair, Mr. Curran, to presume, based on the visit the Committee made to the Border region and what we saw, that smuggling is alive, well and healthy there and that there is probably a substantial amount of money lost, without being able to quantify it.

Deputy McGahon.—I want to bring to Mr. Curran’s attention a recent celebrated case in which a person admitted in the District Court in Carrick macross that he had a turnover of £1,470,000 in a six-month period. You would be perturbed about that. You would naturally ask what type of industry it was and how many people were employed in it. That should be ascertained by your Department.

Mr. Curran.—We will look into that case. I was not personally aware of it. That was recently in Carrickmacross District Court?

Deputy McGahon.—Yes, in April of last year. It was also mentioned in the High Court last week in connection with a libel action.

Mr. Curran.—I know about that case.

Deputy McGahon.—Have you any comment to make on it?

Mr. Curran.—I can make a general comment that the Customs and Excise staff in the Border areas, and indeed the special inquiry branch, have a fairly good idea of some of the people along the whole Border who may be engaged in smuggling; but to catch them at it and to be able to bring them to court and convict them of it is quite another matter. We are certainly perturbed and worried about people who may be or may be suspected of being involved in smuggling. It is another matter to be able to convict them in court of smuggling.

Deputy McGahon.—Would you not accept that a turnover of £1½ million is exceptional in any part of this country? That was an admitted turnover in court. It should be at the very top of your priorities.

Mr. Curran.—I cannot comment on the figure. I do not know anything about it.

Chairman.—The Committee can take that you will be pursuing the matter?

Mr. Curran.—Of course.

Deputy Taylor.—I think the suggestion the the Revenue Commissioners should get but on this in a bit unfair. That would be my view. Is it not the position that when you have regime with a farily long and twisting land Border, as we have with Northern Ireland and you have appreciable price different between North and South, trying to contain that or hold that back without having an enormous force of people patrolling up and do the Border and putting enormous manpower into that would be like King Canute trying hold back the sea? There is no way one could control to any appreciable extent the volume of traffic when there is a major differential there with a long land border. It is a hopeless task. The only way one would have of controlling that would be by trying to bring a greater degree of consistency between the price regimes North and South.

Mr. Curran.—I agree with practically everything the Deputy has said. Our presence on the Border is designed to provide a deterrent, sufficient to make it difficult for people to get casually involved in this sort of thing. If people are prepared to invest very considerable resources and organisation into mounting large scale operations, it is very difficult in that context to catch them all. We catch them some of the time, but I am not sure what proportion we catch.

Deputy Taylor.—Have the Revenue Commissioners ever done any quantitative study to take into account the fact that where smuggling is done in the incredible volume that it obviously is — Deputy McGahon just gives one case and I am sure there could be dozens of similar cases — the State gets no revenue there at all? It does not get its 23 per cent VAT or whatever excise applies. Any VAT or excise element is achieved by the UK authorities in Northern Ireland. If we were to bring our VAT and excise duties into line with the North at least we would get a percentage. It would be a lower percentage perhaps, but at least we would get that percentage instead of getting nothing. Has any quantitative study ever been done to see what the effects of doing that would be?

Mr. Curran.—I think what the Deputy has in mind has been done in the context of preparations for the internal market in 1992. Certain calculations have been done and certain assessments have been made of what the effect on our revenue receipts would be of bringing our rates of VAT and excise duty into line with some generally accepted European level. These have been quantified. They are primarily a matter for the Minister for Finance and they are done by the Department of Finance. They produce these figures. All I can say is that from my recollection the order of magnitude being talked about was something like £500 million to £600 million per annum loss to the Irish Exchequer from reducing our rates of excise duty and VAT to a common level. This is the sort of calculation that has been made.

Deputy McGahon.—Of course, that is only a guess. It could be considerably more than that. It is likely to be more, given the fact that we do not know the extent of smuggling. The real answer is to harmonise the rates on both sides of the Border. This year the Minister took some steps in that direction by reducing excise duty on electrical goods and I applaud him for it. But, with the approach of 1992, I do not think he went far enough. Now that the Irish púnt has achieved parity with sterling the attractions across the Border are such, with the likelihood of the 48-hour limit being lifted, there will be a stampede across the Border at Christmas for the undeniable attractions that exist there. I believe that the law of diminishing returns exist there and that the Minister should make significant reductions this year in order to curb the huge haemorrhage of money across the Border. I accept that you cannot quantify it but I believe that your figure is a very low figure as against the reality.

Mr. Curran.—The changing duties and so on are matters for the Minister. They are policy matters which I cannot get into. With regard to quantification, you calculate the gross loss to the Exchequer as a result of reducing the rates of duty. There is another argument which is opposite to the Deputy’s argument. The Deputy thought that the loss might be even greater but I think Deputy Taylor’s point was that the loss could be smaller because you would then get people buying more goods here rather than going to the North, which would tend to mitigate the effect of the overall loss. These are matters of subjective judgment and calculation.

Deputy Dennehy.—I did not intend to come in on this initially because we are into policy matters——

Chairman.—We are not into policy matters. The Chair will intervene if policy matters are being discussed. It is relevant for the Committee to try to assess what is potentially lost by smuggling on the Border. This Committee went to the Border area——

Deputy Dennehy.—We did, I accompanied you, Chairman on that journey. Someone said it was estimated that the harmonisation of taxes would cost the State £600 million. That was not an estimate, it was a very careful analysis by the people who are paid to do it by the Department of Finance and it was presented to European Community officials. It was a very careful analysis. A sum of £600 million approximately would be lost by harmonisation at the levels suggested by the European Community, or that would be the average, so it is not an estimate. We can only guess at the loss at present from the traffic on the Border, which is a totally different situation. A sum of £600 million per annum would be lost to the State by harmonisation. The State is saying that if we are going for harmonisation we must be compensated for this loss in some other area, which is a correct argument to make.

Deputy Taylor is quite right in saying that we would get something from those who are paying nothing at the moment but we would also lose. That figure of £600 million is the basis for national decisions. The question of smuggling is something that is guessed at and its extent depends on whether you are speaking to the media, the Committee or someone else. Various figures have been mentioned but obviously none of them is accurate. The figure supplied by the State, £600 million as the possible cost of harmonisation has been calculated by the Department of Finance on factual turnover at present. We would need to use that as the basis of our arguments in making suggestions. We all agree with the logic of harmonisation but we also must take its cost into account. A move in that regard was made this year but it is debatable whether the Minister went far enough on it. Certainly it was the first reduction in the rate.

Deputy McGahon.—We already acknowledged that.

Deputy Dennehy.—There was a reduction in the rate but the Minister did not go far enough, although that is a debatable point depending on whether you are buying or selling. I welcome it because it is a step in the right direction. It is something we recommended following our trip to the Border. We felt this was the only way out and I am glad the Minister listened to this Committee very carefully.

Chairman.—Do you want to respond to that?

Mr. Curran.—I to do not think I have anything to add.

Chairman.—Before I call Deputy Taylor, I should say that having visited the Border region the Committee have seen at first hand the extreme difficulty in policing the area. There are some very blatant examples which we observed there, for instance, the warehouse and the pig smuggling operation straddling the Border. It is very difficult to deal with that when a farmhouse straddles the Border. The visit gave the Committee an appreciation of that fact. The only way to deal with the problem in the long term is harmonisation, which is what the European Community and the Government of the day will try to achieve. However, you cannot put a policeman or a customs officer on every hilltop. It is quite a difficult situation to deal with; we have to accept that and try to bring about the removal of the problem by increasing the area of harmonisation, particularly in the high smuggling areas of televisions, videos and that sort of thing.

Deputy Taylor.—I wish to take a slightly different tack on the question of assessment and collection of income tax. Will Mr. Curran comment on the extraordinary delays in getting replies to correspondence to inspectors of taxes dealing with income tax accounts? In many cases this must result, if not in loss of money to the Revenue Commissioners certainly in delays in the payment of it, which comes to the same thing. Many constituents have complained to me that when they or their accountants on their behalf enter into correspondence with an inspector of taxes or the Revenue Commissioners regarding their complex income tax affairs, if they get a reply within three months they are doing well. It could take four months, five months or six months. They have to follow up with telephone calls and to get a response at all takes an inordinate length of time. It may involve exchanges of correspondence to clarify various aspects of income tax accounts and this delay worries people. Is Mr. Curran aware that it is taking that long to get replies to correspondence and can anything be done about that? Or is anything being done about it?

Mr. Curran.—I am certainly not aware that that is the norm or that it happens frequently. However, I accept what the Deputy says and I invite him to let me know, separately, of any cases where there is a particular difficulty in this way. Our general approach to try to ameliorate matters was to promote this idea of selfassessment. Part of that idea was to cut out any reason for correspondence, because we hope that in the last majority of cases there will simply be a return that will be accepted and go through the system. However, a small percentage of cases will be checked and may entail some correspondence. The vast bulk of cases will not involve correspondence. I also have to say that I do, from time to time, hear of the experience of people who go along to tax offices to discuss their affairs to try to iron out difficulties and so on. In practically all the cases I have heard about, the people who go to the tax offices come away very satisfied with the reception and satisfied that the staff in the tax office have done their best to help them and to be constructive. Having said all that, if there is a sudden peak of correspondence somewhere, or if there is a temporary staff shortage, obviously difficulties can arise. I am certainly not aware that there is any general problem of the sort the Deputy referred to.

Deputy Taylor.—Will you comment on the staff position? Do you say that you have an adequate number of staff to deal with matters or are there shortages?

Mr. Curran.—We are in a process of evolution at the moment where I would have to say, overall, the staffing position is reasonably satisfactory. The problem is that in changing from one system to another the places where the staff are perhaps surplus to requirements are not the places where the new sort of work is arising. At the moment we want to redeploy staff from one area to another but in an overall sense we are reasonably well off for staff. That is not to say that we do not need extra staff in certain particular areas, because we certainly do. Over the last five years we have lost over 700 heads of staff, which represents a reduction of over 10 per cent in our staffing numbers. This is very serious because, whereas we might be able to live with that, the fact that there has not been any recruitment recently means we have not had any staff in the last year. The heads of staff referred to in the Collector General’s Office were allocated early last year but they did not arrive until during the year. By that time with natural wastage more had left, so all we did was to slow down the reductions somewhat. Certainly, this year we will be seeking to fill a number of vacancies on our staff.

Deputy Taylor.—Would you say that a reduction of staff of 10 per cent would have implications for loss of revenue and that revenue has been lost by reason of staff reductions of that magnitude?

Mr. Curran.—I could not say that in the particular circumstances of the last couple of years, where we had this whole new system coming in, where we have had an amnesty and have brought to account all the money we got. Perhaps the other side of the same coin is that the recruits we are looking for this year will more than pay for themselves by a very large multiplier. If we do not get them there certainly will be a danger of losing revenue.

Deputy Ahern.—I should like to make it clear that I do not think it should go out from here that the Committee are saying that the Revenue or the inspectors of taxes are not replying to letters within a certain time. From my dealings with Revenue I find they work exceptionally efficiently, even under trying circumstances. There are exceptions but in general they are very efficient. Over the last year or so many officers were out on the road collecting tax. I understand the system is that the Collector General forwards names of people who have been defaulters over many years to the local offices and then the officers go out and visit the individuals. Has there been a hiccup in the system of sending names from the Collector General’s offices to the local offices in recent times?

Mr. Curran.—Yes, I think it is fair to describe it as a hiccup, possibly a misunderstanding, I am not quite sure. Essentially at the core of this there is a question of demarcation between two groups of staff represented by different unions. To explain briefly, in the immediate aftermath of the amnesty we had to look at the hard core of arrears, people who had not availed themselves of the amnesty. We had to take these out and, before sending them to enforcement, we sent them back to the inspectors to check them thoroughly to make sure that the assessment was well founded, to make sure that the taxpayer were still there, that they had not gone away, so that we were not wasting our time. In other words, we checked them to see what was the status of the charge and if necessary to go out to see if the person was still there or if he had gone to Australia. This was done, but in the course of doing that the question arose as to whether an inspector visiting a taxpayer should accept money tendered to him. The Collector General’s staff were very sensitive on this issue because they regarded collection as their function, which is correct. The question was whether this represented an intrusion by the inspector’s staff into the collection function. Consequently, there was a certain amount of industrial action, actions were blacked and so on. The bulk of the work was done. I am not saying any money was lost but that really links up with another question which has been aired at this Committee in the past. It is something that I undertook to the Committee that we would look at, that is, the question of having a local dimension for the collection function. I have gone into this, I have had studies done inside and, despite the fact that there are serious reservations about it, I propose to initiate something on those lines in a small way for a start. We do not have the fine details yet and I do not want to go into it in too much detail because the next move is to put a document before the trade unions representing the staff. We want to show them our proposals and look for their co-operation. By and large what I hope to do is to start on a trial basis in some provincial tax offices, to put a member of the Collector General’s staff down there to represent a local collection function. We will see how it goes. The argument is that it will be simply another duplication and waste of time. The other argument is that people will respond better to that sort of approach. We will see. I hope that answers the Deputy’s question.

Deputy Ahern.—Do you envisage that the local officers will continue to call out to individuals as they have been doing? From what I heard they have had success — this applies to any business — in that when you knock on the door you stand a better chance of getting money than if you send a letter. Do you envisage that this method will continue?

Mr. Curran.—I want to make it very clear that a whole new procedure has been installed in the inspectors’ offices and what we were talking about just now was looking at the hard core of arrears. Apart from that, the inspectors’ offices will now be involved in going out visiting people to secure compliance and visiting them for the purposes of carrying out audits. The whole role of the inspector’s office has changed, and the outdoor dimension of that new role is here to stay, inspectors will be on the road and they will be seen. I am told from going around visiting some offices that one of the best known cars now in any district is the inspector’s car and people know who the inspector has visited last week. This is all high profile and we hope it will have a salutary effect.

Chairman.—We have had a general discussion on these paragraphs and I intend to turn the pages very quickly on this.

Deputy Dennehy.—What interest rate is charged on arrears for taxes?

Mr. Curran.—It is 15 per cent per annum.

Deputy Dennehy.—Is interest paid on over-payments that are due back?

Mr. Curran.—Yes.

Chairman.—We are coming to that.

Deputy Dennehy.—I want to take the two here if you do not mind, because interest charged crops up in the very first page. I question the morals of the State charging people 15 per cent on the one hand and repaying 12 per cent on the other. Should we not reverse that? Should we not pay interest at the rate of 15 per cent to those who overpaid? Should we not be paying the same rate of interest on moneys held by the Commissioners by way of overpayment as we are charging on debts owed to the Commissioners?

Mr. Curran.—There are two points. First, we should not be looked upon as if we were a financial institution for receipt of deposits. Second, the purpose of the interest charge is penal — in other words, the interest that we charge should be heavier than the interest which would be chargeable or available elsewhere. That, basically, is the purpose. It is not supposed to be a market rate.

Deputy Dennehy.—I accept that totally. I have not argued against it in the past. I would say that in State dealings with the public the State is entitled to charge a penal rate of interest, but where the State have taken money incorrectly from people, which they will repay, they should repay it at the same interest rate. The State only pay 1 per cent for a month or a proportion of a month on overpayment and I feel it is logical that the State pay the higher rate in this case. The outstanding amount to be repaid is very tiny in comparison with the moneys which are owed in general. I think it is a point of principle that the State should pay the same interest rate. It is not a question of people having money tax free. I am suggesting where people have overpaid and that money is being held by the Commissioners that the State should pay them the same level of interest, whatever that is, which they charge.

Chairman.—Perhaps Mr. Curran would like to respond to that particular point.

Mr. Curran.—We repay at 12 per cent, which is a much higher rate than people would get from practically any other deposit taking institution. Second, I take the Deputy’s point: it is a question for debate as to what the rate should be and ultimately a question of Government policy. I would not want to get too deeply into it.

Chairman.—We are coming to it in paragraph 27, but it would be fair to say that if a taxpayer paid his tax through his bank account the interest would be allowable against tax as a tax deduction but the interest that he pays to you in penalty tax is not allowable as a tax deduction. That more or less equates to the refund situation where the interest paid to him is not taxable either, is that not right? There is a quid pro quo?

Mr. Curran.—There is a balance there, yes.

Deputy McGahon.—Could I make the point that I have a certain sympathy with Deputy Dennehy’s comments, particularly in relation to the very hard pressed small business man. Is it also not true to say that a high roller or a man with a lot of money could deliberately overpay a significant amount of money and receive a very handsome return?

Chairman.—That arises under paragraph 27. I am going to have to be quite ruthless now because we have discussed this in great detail. There are a lot of pages in relation to paragraph 21, and I would like to go through them now. Mr. Curran, on Schedule 1 — Income Tax (excluding PAYE) — the total amount of taxes outstanding for income tax, excluding PAYE, for all the years to 1988-1989 is £120 million, that is, £45 million, plus £20 million, plus £55 million. That is about 3.9 per cent of the total take for 1988. Would you think that is as efficient as you can be? Are the Commissioners satisfied with that level of collection?

Mr. Curran.—It compares well with what has been achieved in the past and we are looking for further improvements.

Chairman.—So there are no huge taxes outstanding in relation to the years in question? Relatively, you are collecting over 96 per cent of the taxes which you consider are due?

Mr. Curran.—Yes.

Chairman.—Can we turn to page xviii, Schedule 1 (g): “A levy on Pension Funds was introduced in 1988 — Section 53 of the Finance Act, 1988. The levy accounts for £13 million of the charge …” Did you anticipate that you would receive that amount of money in the year in question, Mr. Curran, £13 million is a lot of money?

Mr. Curran.—No. I am not sure that we did. That would have been a budgetary decision and there would be something in the budget arithmetic for it.

Chairman.—It was not repeated?

Mr. Curran.—It was a once-off charge on the pension fund.

Chairman.—What is the theory behind a once-off charge, why just a once-off charge?

Mr. Curran.—That is a policy matter for the Minister. I could not say why.

Chairman.—Have Deputies any other questions on Schedule 2? Right, over to page xix and we have another Schedule, Schedule 3 — Pay Related Social Insurance. Any questions on this — PRSI? Schedule 3 continues over the page.

Deputy Taylor.—On the question of PRSI the Comptroller and Auditor General made a criticism regarding the making available of information on PRSI payments and credits to the Department of Social Welfare by the Revenue Commissioners. If I remember rightly, it was pointed out that there was an appreciable amount of data which was not being transferred from Mr. Curran’s office to the Department of Social Welfare, resulting very likely in many thousands of people perhaps not getting the social welfare entitlements which they would be entitled to as a result of the failure to make the material on your computers available to the Department of Social Welfare. Would Mr. Curran care to comment on that?

Mr. Curran.—We transfer all the information that we get from employers to the Department of Social Welfare. We transfer that to the Department as quickly as we can. Basically we get the information from the P.35 forms which are returned by employers at the end of each year. The problem is that there are gaps and deficiencies in the information available from the P.35 and we can fail to match the contributions with the RSI numbers for a number of reasons. For example, the correct number is not received by the employer until after he has submitted his end of year return; perhaps the employee is being taxed under the emergency system and the employer fails to link the numbers with the tax deduction card. Some employers do not notify us of this. There are various reasons. What we do is that we investigate as far as we can and we send on corrections to the Department of Social Welfare — we would send on something of the order of 200,000 additional returns or additional corrections to the Department of Social Welfare each year — and that Department use those then to update their records. In the end it has to be said that basic responsibility for providing the information rests with the employee and the employer to make sure that proper details are recorded in the returns that are sent to us.

Deputy Taylor.—I cannot recall exactly the wording the Comptroller and Auditor General used in his comment. No doubt he has it in front of him and can give it to us. The impression left in my mind was that it was rather more extensive than the Accounting Officer has described. I think he was talking about perhaps 1.3 million items — admittedly going back many years — which were unaccounted for. I accept that many of those may be years back, but as against that contributions for social welfare purposes that a person may be entitled to, even from many years ago, could affect that person’s social welfare entitlements today. The impression given by the Comptroller and Auditor General’s comment which arose from the report from the Department of Social Welfare was that there was a very appreciable shortfall in making available information that the Revenue Commissioners had, leaving aside the question of difficulties that the Accounting Officer spoke about. Maybe the Comptroller and Auditor General could come in on the issue at this point.

Mr. McDonnell.—When the Committee were discussing social welfare recently — paragraph 58 is the one in question — I said regarding the system which provides for the transmission of the data from the Revenue Commissioners to Social Welfare that we had noted that the information furnished was frequently incomplete. For instance, there was the absence of the RSI numbers, as the Accounting Officer has said, with the result that the Department of Social Welfare had been unable to identify the persons to whom the contributions should be credited. Consequently an unprocessed emergency file of such cases comprising, 1.3 million items, has built up in the Department of Social Welfare of which approximately 143,000 related to 1987-88. There were a couple of further points made in the paragraph, one being a once-off situation, where a file of data in the course of transmission went astray. The essential point that Deputy Taylor is concerned about is the file of unidentified items which has built up in the Department of Social Welfare.

As the Accounting Officer said, the process of trying to establish the identity of the contributors to whom the contributions should be credited is ongoing but I was concerned that there was still this large block of unidentified contributions. For instance, of the 1.3 million, which admittedly has built up over a long number of years, 143,000 of those of the type the Accounting Officer mentions related to 1987-88. A subsequent review of the 1987-88 contributions at the stage when my report was written had identified 45,000 of these, so there seemed to be some suggestion that there was a constant increase, so to speak, that each year the amount which they succeeded in identifying was not quite the full amount of the initial cases where they had not been able to identify them.

I was concerned about this, not just from the point of view Deputy Taylor mentions, but as I said in my comment on the day of the meeting here, because of the obvious difficulty a claimant might have in trying to prove entitlement and there would be considerable administrative expense involved in sorting things out at the claims stage. What the Accounting Officer has outlined is what happens. The Revenue Commissioners do not necessarily have all the data from the employers on the returns they get from the employers, and they do the best they can with what they have. I would have no complaints that the Revenue Commissioners do not give the Department of Social Welfare all the information they have. Unfortunately the information they have is not sufficient, but the facts are as Deputy Taylor mentioned.

Chairman.—The Committee wrote to you. Mr. Curran, about this after the examination of the Accounting Officer for Social Welfare. We got a reply back saying that it might not be cost effective to give the amount of detail from employers’ records that we requested. I suggest that you look at paragraph 58 of the Comptroller and Auditor General’s Report, consider again the question raised by Deputy Taylor and the question which arises in paragraph 58, and reply to the Committee in due course as to how the situation might be made more efficient.

Mr. Curran.—Yes, I will be happy to do that. The Minister for Social Welfare answered questions on Thursday, 29 March, and he mentioned that this whole operation is kept under constant review. We are naturally very concerned about this situation and we will look into it in consultation with our colleagues in the Department of Social Welfare. I will be happy to keep the Committee informed of any further progress we make in this area.

Mr. McDonnell.—I want to clarify a point in relation to what was said about the memo which the Committee since got from the Revenue Commissioners. In my paragraph on the Department of Social Welfare there were three points. There was the point Deputy Taylor made about the unidentified items. There was the point which I mentioned about a particular once-off situation in which a file went astray with a number of records on it and there was a third point which I had been making that there appeared to have been a facility in the Revenue Commissioners’ computerised system for identifying whether the correct rate of contribution had been paid in respect of each employee. At that time it was said that that facility had not been used for some years. Since that, the Accounting Officer from the Revenue Commissioners has replied to me. The Committee will recall that in dealing with the Department of Social Welfare I did not have the Revenue Commissioners’ Accounting Officer’s reply at that time but looking at it from the Social Welfare end it seemd to us that use of this facility might be a good idea. It also seemed like a good idea to the Department of Social Welfare. When the Revenue Commissioners looked at it they thought that it might not be cost effective and that there were other ways of doing it. I want to clarify that that was related to a particular facility within the system and the use of it rather than the unidentified items Deputy Taylor is talking about.

Chairman.—We can note Schedules 2 and 3 and go on to Schedule 4 — Corporation Tax. Are there any comments on that? We will go to Schedule 5 — Capital Gains Tax and Schedule 6 — Capital Acquisitions Tax.

Deputy Taylor.—On the question of capital acquisitions tax, I think the self-assessment there came in relatively recently. Let me ask the Accounting Officer how that has been working out. The manner in which the capital acqusitions tax procedures have evolved seem to be extraordinarily complex. The degree of complexity in the forms alone is almost mind boggling. Can he say whether it is going to be terribly effective to operate as a self-assessment procedure having regard to the extraordinary complexity that is now built into that system? Would he agree that the numbers of people, both on the submitting side and in his own Department on the Revenue side who are fully on top of that system, must be very small indeed and that there could be losses of revenue there as a result of the complexity and an inadequate degree of expertise both inside and outside the Revenue Commissioners on that score? It may be too early to say that yet as I realise that it is not all that long in operation, but I would be interested to know if Mr. Curran has any thoughts along those lines?

Mr. Curran.—First, complexity exists in various taxes and it seems to be one of the facts of life. As regards the complexity of the forms, I will have a look at that. I am not aware that I have had any specific complaints about them.

Deputy Taylor.—I am not saying that they are any more complex than they need be. They are no more complex than is required having regard to the system that is there.

Mr. Curran.—I take the Deputy’s point. On the general question of the complexity and administration of it and whether or not it is working properly, the point we have to remember about this tax is that for practically all cases you could say the returns are handled by members of the legal profession. It involves mostly probate and estates and matters of that sort. Over the last couple of years, in preparation for the introduction of this self-assessment system, our staff from the capital taxes branch put in a great deal of work in running seminars and instructional courses for members of the profession both here at headquarters and around the country in provincial centres. I think the members of the profession were very happy with this and expressed themselves to me in writing as being very complimentary about the assistance and guidance that they had got from our staff in helping them to understand, set up and run the new system. That is where it stands at the moment. The reaction is good. It seems to be working well; but, as the Deputy said, it is early days and we will keep an eye on it.

Chairman.—We note these two schedules. Over the page we have Schedule 7 — Surtax, Corporation Profits Tax and Wealth Tax. I presume this schedule will be disappearing at some stage in the future since these taxes have disappeared. Schedule 8 — Health Contributions, Employment and Training Levy and Income Levy.

Deputy McGahon.—I crave your indulgence to raise an issue here that is not under any appropriate heading. It is an issue that is peculiar to the Border area from Louth to Derry. While it affects a relatively small number of people it is very significant for the people involved. I refer to double taxation. I do not know whether the Accounting Officer is particularly familiar with that, but I feel that there are many people who live in the South and who are forced to go across the Border to earn their livelihood. Many of them are teachers. The problem arose in 1985, so Deputy Dennehy need not get uptight about it. It is still there and it is patently unjust that people are being asked to pay double taxation and in some cases have received notification from the sheriff. These are ordinary working people who are forced to go outside the State to earn their livelihood and who pay their taxes in the country in which they are employed. Surely, that system is wrong. Could the Accounting Officer make a comment on it?

Chairman.—I will allow a brief reply, Mr. Curran, but I think the best way to deal with it might be if you give a written reply to Deputy McGahon.

Deputy McGahon.—I do not expect instant answers but I ask the Accounting Officer to address it in the interests of fairness.

Mr. Curran.—There is a double taxation agreement and there are rules about this. It has been operating for years and there should not be any question of total double taxation. If there is, if there is a particular case, let us know and we will look at it.

Chairman.—This point I have heard raised in other fora. I suggest that you might write to Deputy McGahon setting out what the position is and then we might take it under an appropriate heading if it arises at some other stage.

Deputy McGahon.—I raised this on the budget debate, and there is an association who have sought and been granted a meeting with the Minister for Finance. It is something that can and should be addressed. It is putting a great deal of stress on people who are paying their taxes on the other side of the Border.

Deputy Dennehy.—I have a question on Schedule 8, which was raised by Deputy Connor earlier. It is the question of the health levies. Is there an element of this under Schedule 8, outstanding levies to health boards or due to be collected by health boards? Did that become a bit complicated at some stage in 1985 or 1986? What is the present situation with regard to outstanding health levies for the health boards?

Mr. Curran.—I am afraid I cannot comment on the Deputy’s question because that would be a matter for the health boards to look after. It does not come within my area of competence.

Chairman.—This only covers the area since you took responsibility.

Mr. Curran.—That is right.

Chairman.—You do not have the details?

Mr. Curran.—I have no information about the health board situation.

Deputy Dennehy.—I was referring to the heading “All Years to 1986-87”. There is an element of that included. Is some of that finance due to the health boards or would that be a separate account?

Mr. Curran.—No, that is separate.

Chairman.—Schedule 9 — Value Added Tax. Note (c) states: “The balances outstanding are not a measure of equitable liability and cannot, therefore, be taken as a measure of arrears of tax. Many of the outstanding returns may show little or no liability when furnished”. Is that because estimates have been raised in the absence of accurate records?

Mr. Curran.—These are estimates. This part of the schedule relates to estimates which have been raised.

Chairman.—So, your estimate of the likely amount of VAT collected all years including up to 1988 is £51 million, £20 million plus £11 million plus £20 million, is that right?

Mr. Curran.—That is right, the amount likely to be collected.

Chairman.—Does the £51 million refer to people who have failed to make their returns?

Mr. Curran.—Yes.

Chairman.—Is the amount outstanding for people who have actually complied £84 million?

Mr. Curran.—It is £27 million, £17 million and £40 million, is that not right?

Chairman.—That is a fair amount of VAT outstanding, £84 million plus £51 million?

Mr. Curran.—It comes to £84 million and £34 million and £51 million those three together.

Chairman.—There is another £34 million for people who have partly complied. You have £84 million, £34 million and £51 million. That is £169 million, all years.

Mr. Curran.—Yes.

Chairman.—Would you consider that a very high amount of money outstanding? How does it compare to previous years?

Mr. Curran.—It has been of that order before. There is a big reduction as at 1989 of the amounts likely to be collected. For example, look at the £84 million; the corresponding figure the previous year would have been £110 million. Going back to 1986 the corresponding figure would have been £192 million, so it is a considerable improvement.

Chairman.—It would appear you are eating into the arrears?

Mr. Curran.—Yes.

Chairman.—Schedule 10 — Residential Property Tax. What have you been taking from this in the most recent years? Do the Revenue Commissioners have any role in advising on whether taxes are equitable?

Mr. Curran.—We have an input to the debate which goes on in the Department of Finance. Our colleagues listen with respect to our views and then formulate finally what the advice to the Minister is to be, and then the Minister makes up his own mind.

Chairman.—When this tax was introduced there was a 10 per cent reduction on the tax for each minor child who qualified for the child tax free allowance. When that was abolished as an accidental aside the 10 per cent reduction was abolished but now the Minister has restored that and it has brought more equity into the system. It takes all family income into account. Is that right? If you had a daughter who was working would her income be added to yours to come to the figure of whatever it is?

Mr. Curran.—If she was living in the house, yes.

Chairman.—What is the income limit at present? Is it £24,000?

Mr. Curran.—It is higher than that. It is £26,500.

Chairman.—That is total family income?

Mr. Curran.—That is right. It is aggregated.

Chairman.—What is the property value?

Mr. Curran.—In 1989 it was £82,700.

Chairman.—They would aggregate all residential property, so if you had a small house in Crumlin and your aunt left you a house in Wexford you would add the two together and if it came to more than £82,000 and yourself and your daughter had more than £24,000 income you would pay tax at 1.5 per cent.

Mr. Curran.—On the excess over the £82,000, that is correct. Those figures will be changed again this year.

Chairman.—You go on market value?

Mr. Curran.—No, we get a figure for the cost from the Department of the Environment.

Chairman.—If the market value of my house exceeds that cost then I am liable and if it does not I am not, provided I have the relevant income.

Mr. Curran.—That is correct. It is the market value.

Chairman.—A person living in Harold’s Cross who would have a property valued at £86,000 and only £25,000 income to the house would pay the residential property tax and somebody over the canal, a hundred yards away in Clanbrassil Street with a house valued at £82,000 with a £50,000 income into the house would not pay tax.

Mr. Curran.—That is correct.

Chairman.—Do you bear that in mind when you are making recommendations regarding how the tax is assessed, when you are giving your advice?

Mr. Curran.—We do.

Chairman.—Do you consider whether it is equittable?

Mr. Curran.—That is a political judgment.

Chairman.—Paragraph 22 of the Report of the Comptroller and Auditor General reads:

Self Assessment

Under the provisions of Chapter II of Part I of the Finance Act, 1988 a system of Self Assessment to income tax was introduced with effect from the 1988/89 year of assessment for the self-employed and for certain taxpayers who do not pay all their tax under the PAYE system. The Self Assessment system has also been applied to companies paying corporation tax in respect of accounting periods ending on or after 1 October 1989. The legislation places a legal obligation on all taxpayers subject to Self Assessment to pay, within one month after 1 October of each tax year, the income tax which they estimate to be due by them. This is known as Preliminary Tax. Every taxpayer subject to Self Assessment, except those who have been otherwise notified, is also required to submit a return of income not later than 31 December in each tax year and if the Preliminary Tax paid is less than 90% of the amount found to be due on the basis of that return, interest will be charged on the amount underpaid. In the event of a taxpayer failing to make a return by 31 December, monetary penalties, including a surcharge based on the tax assessed, will become payable in addition to the tax. The right of appeal applies only if the tax based on the return has been paid and then only if the assessment is not in accordance with that return or if a bona fide error has been made in the return.

The Revenue Commissioners’ procedures for operating the Self Assessment system include the recording of returns to ensure that taxpayers for whom records exist furnish returns and pay the tax due: the screening of returns to evaluate the reasonableness of the information furnished; an in-depth audit and examination of all relevant information in a limited number of cases and the issuing of assessments. In addition compliance operations to identify those not on record have been intensified.

I have not yet had the opportunity to examine whether these procedures are adequate to achieve a satisfactory level of compliance by taxpayers and whether such procedures are being effectively operated.

Mr. McDonnell.—This paragraph was included for information and to give the Committee an opportunity of discussing this new system of self-assessment to income tax for the self-employed and certain taxpayers who do not pay all their tax under the PAYE system. It is intended to be more effective in assessing and collecting tax and to enable more effective action to be taken against those who do not comply.

From my point of view, it is a little early to make any comment on the new arrangements or how effective they are going to be in ensuring a high level of compliance and accuracy. I think I am right in saying that the administrative arrangements for identifying the noncomplying taxpayers were not really in place until the end of 1989 and the screening and auditing of returns were not formalised until about September 1989, but some information which I got suggested to me that about 85 per cent of taxpayers who are on the Revenue Commissioners’ books complied with the requirement to make a return for 1988-89. About 200 detailed audits have been undertaken to date and have resulted in identifying about £600,000 of tax underpaid. I do not want to make any specific comment at this stage.

Chairman.—The whole idea of self-assessment is to free up your staff to get people to make their tax returns and then for you to carry out a 10 per cent audit so that people would be kept honest, so to speak. Has the 10 per cent audit taken place?

Mr. Curran.—We have started the audit programme in all districts throughout the country.

Chairman.—Picked at random?

Mr. Curran.—The districts were not picked at random.

Chairman.—No, the taxpayers?

Mr. Curran.—Some taxpayers were picked at random to make sure that there is a certain spread of cases. For example, we would not want to pick a few cases all in the one area, or cases all being dealt with by the one agent. We would have to secure a spread.

Chairman.—Your objective would be a 10 per cent audit in a given year?

Mr. Curran.—Something like that.

Chairman.—What would that entail?

Mr. Curran.—The physical part of the audit means that the inspector from the tax office goes out and visits the taxpayer’s premises and conducts an audit on the premises. Very often these audits would last two or three days. For the initial meeting the taxpayer is very often accompanied by his agent but then the agent goes away and lets the inspector get on with his audit. So far the results have been very good. Our staff have not experienced any difficulties or adverse reactions. People seem to understand what it is all about and they are co-operating.

Chairman.—Does it apply only to income tax at present?

Mr. Curran.—No, we have always had audits of value-added tax and there have always been audits of PAYE. These income tax audits are the new audits.

Chairman.—Do the new audits apply to corporation tax?

Mr. Curran.—They will, because the corporation tax self-assessment scheme started a year later.

Deputy M. Ahern.—I want to go slightly off the subject to join with the majority. Assessments have always been on a PY basis. The actual year basis is being discussed. Is it likely to come into effect in the very near future? Will it be on the financial year or the calendar year? Is it envisaged that people pick their own year?

Mr. Curran.—As the Deputy will appreciate, we will have to wait until the Finance Bill is published to see what is in it. As far as we are concerned, I have no hesitation in saying we would like to have the single return, the one-year basis, from the point of view of administrative simplicity and in order to facilitate the operation of self-assessment, but there are other issues involved and we will have to wait and see what the Minister proposes in the Finance Bill.

Deputy McGahon.—Is it fair to say that the introduction of self-assessment with an 85 per cent return has been very successful?

Mr. Curran.—Yes.

Deputy McGahon.—It gives the lie to opinion sometimes held in other quarters that self-employed people do not want to pay tax, so it is very encouraging in that respect. I am a little concerned that the right of appeal applies only if the tax based on the return has been paid. That is rather draconian to a person who is perhaps not liable for the amount requested. The person might have to borrow money.

Mr. Curran.—I am not sure that I understand. A person sends in a return. The inspector, on the basis of that return, issues an assessment. If the taxpayer is not satisfied with that assessment, if he thinks it is too much, he does not have to pay. He sends in his own statement of what he thinks he owes and it is that figure he has to pay.

Deputy McGahon.—I misread it. I thought it was the tax assessment that he was being asked for.

Chairman.—Can we note the self assessment and go on?

Paragraph 23 of the report of the Comptroller and Auditor General reads:

Settlements

In paragraph 20 of my previous Report I referred to back-duty settlements accepted by the Revenue Commissioners following their investigations into cases where taxpayers had underpaid tax because of their failure to disclose relevant information. The Revenue Commissioners informed me that during 1988 investigations were completed in 397 cases, 374 of which resulted in backpayer duty settlements amounting to £20,117,394 (£13,196,400 in 1987) becoming collectible inclusive of £530,323 (£4,288,565 in 1987) in penalty and interest charges. The penalty and interest element in the 1988 settlements is significantly lower than in 1987 because the incentive under Section 72 of the Finance Act, 1988 providing for the waiver of certain penalty and interest charges, applied also to any case which was under investigation by an inspector and where the tax due under the settlement was paid during the period 27 January 1988 to 30 September 1988. Of the 374 back-duty settlement cases in 1988 the Section 72 incentive applied in 315 cases and the back-duty involved in these cases amounted to £17,793,631.

I also referred in paragraph 20 of my previous Report to the omission of information regarding the collection and bringing to account of tax due under settlements from the schedules furnished to me by the Revenue Commissioners and included in my Report. Pending the compilation in similar schedule format of full statistics regarding back-duty settlements and collection, which I have requested the Revenue Commissioners to provide, they have furnished the following information:—

Part 1

Part 2

The distribution of 1988 settlements under tax head is as follows:

Mr. McDonnell.—What I am referring to here is the investigation by the Revenue Commissioners into cases where taxpayers underpay tax because of their failure to disclose information. It shows the number of settlements reached with taxpayers during 1988 arising out of these investigations and it shows the distribution under the tax heads. One would expect, when a settlement is reached in these circumstances where it follows an investigation, that the tax agreed on would be paid fairly quickly. I do not know whether that is the case and perhaps the fact that a settlement has been made does not necessarily mean that the tax automatically is received but that collection is another day’s work. The Chairman will recall that when the Committee were discussing this in 1987 the Accounting Officer agreed to examine the system of recording these transactions so that I would be enabled to include a schedule giving information to the Committee, not just about the settlements but about the collection of the amounts agreed on. What you will notice if you look at the statistics is that, while I give the amount of settlement, the number of cases in 1988 and the number of cases already on hands and the number of cases still to be dealt with I do not give the actual amounts collected from these settlements and, indeed, from previous settlements and that is what I would have in mind in order to complete the picture. I believe that arrangements are being made to provide this information by restructuring or rearranging the accounting and recording procedures. I am not sure how soon I will be furnished with information which will enable me to put before the Committee not just the number of cases in which settlements have been made and the value of the settlements, but whether or not they have been collected.

Chairman.—How soon can we have this in schedule form, Mr. Curran?

Mr. Curran.—The statistics on the new basis will become available from the year 1990 this year. When we looked into it we found that whereas all the figures referred to by the Auditor were available they were in different areas and they were being brought to account in different ways. We have rationalised that. We have brought it all into the same system and, as and from the current year, 1990, all these figures and statistics will be available in the form which the Auditor has asked for.

Chairman.—And Mr. McDonnell can then include them as he desires?

Mr. McDonnell.—Yes.

Chairman.—Is there anything else to be asked on this paragraph? Could Mr. Curran give us some measure of what the situation is on settlements? From the compilation of figures that you have so far what is the state of play?

Mr. Curran.—I am not quite sure what you mean, Chairman. The question of settlements is an ongoing matter.

Chairman.—Under this schedule there are various amounts of money shown. How much has been collected? What is the percentage?

Mr. Curran.—That is all collected. The figures shown there show money actually collected.

Chairman.—What does that represent of the amount you think should be collected? Is that 50 per cent——?

Mr. Curran.—It is the whole lot of it. We collected the entire amount which was the subject of the settlement.

Chairman.—So when you reach a settlement you reach a settlement on the basis that it is paid there and then?

Mr. Curran.—Yes.

Chairman.—Are there any other questions on this? Presumably the necessity for these settlements has reduced after the amnesty?

Mr. Curran.—Yes. In fact, the figures show that. The cases on hands in January 1988 were 725. At the end of that year they were down to 483.

Chairman.—We will note that and go on to Paragraph 24. Deputy Connor wanted to raise a question on this.

Paragraphs 24 and 25 of the report of the Comptroller and Auditor General read:

Collection of Outstanding Taxes

24. The following statistics furnished to me by the Revenue Commissioners show the position regarding the referral of certificates issued under Section 485. of the Income Tax Act, 1967 to sheriffs to enforce collection of outstanding taxes and the results of such action.

TABLE 1

TABLE 2

Analysis under tax heads of certificates on hands

In addition to the 95,201 certificates on hands of sheriffs at 31 December 1988 a further estimated 77,608 certificates due for enforcement had not been referred to them at that date because of the lack of resources within the Collector General’s Office and due to the redeployment of staff during the final quarter of 1988 to deal with the overwhelming response to the tax amnesty. The estimated value of the charges involved is £257 million. The amount paid over to the Collector General in 1988 as a result of enforcement was £100.6 million compared with £49.7 million in 1987. The 1988 figure includes tax paid to the sheriffs by taxpayers taking advantage of the terms of the tax amnesty.

In my previous Report I referred to a request by the Collector General to sheriffs to include in their monthly progress reports information regarding amounts which they had collected but had not paid over. I have been informed that it was not feasible for sheriffs to provide the information in the detailed manner envisaged. However, in late 1988 new procedures were agreed which require each sheriff to report monthly the balance of remittances on hands and to report every six months the opening balance, the amount collected in the six months and the amount paid over during the period to the Collector General and the balance on hands verified by bank certificate together with a bank reconciliation certified by the sheriff’s own auditor. It was also agreed that when tax and interest due under each certificate had been collected in full it would be remitted with the next monthly payment and that the sheriff would retain the certificate and pursue fees and costs from the defaulter where these were not paid in full with the tax. Additionally, it was agreed that the duration of instalment arrangements with taxpayers would not exceed six months and that, if the final instalment was not paid within that period, the amount already received in the case would be included in the next monthly payment. The procedures also provide that the overall limit on the balance held by each sheriff at the end of any month may not exceed the total paid over by him in the previous four month period. I was informed, however, that owing to the impact of the response to the tax amnesty both on the Collector General’s Office and on the sheriffs, the agreed procedures did not come into effect until March 1989.

25. In the course of audit I noted that the issue of Section 485 certificates was suspended during the period late August 1988 to mid December 1988 and that when the issuing of certificates was resumed certain categories of tax arrears were not included in the certificates issued in respect of individual taxpayers. I also noted that in early 1989 it was decided to recall all outstanding certificates because the volume of payments made it impossible to operate the normal procedure of notifying the sheriffs of any payments received in the Collector General’s Office in respect of items which had been referred to them for enforcement. I inquired regarding the circumstances in which it was decided to suspend the issue of certificates for the period mentioned and whether the issue of certificates had fully resumed for all taxes. I also inquired as to the present position with regard to the review of the certificates which had been recalled.

The Accounting Officer informed me that it was decided to suspend the issue of certificates to sheriffs in August 1988 against a background of prolonged industrial action in the Collector General’s Office in 1988 and the overwhelming response to the amnesty which put both that Office and the sheriffs under great pressure to maximise the positive impact of the amnesty.

The Accounting Officer also stated that the issue of certificates had been resumed fully in respect of all taxes due from 1 October 1988 but, with few exceptions, certificates had not been issued on a wide scale for liabilities due prior to that date. He explained that, despite the success of the amnesty, it was found that a substantial amount of arrears still remained on the records at the end of 1988 and that a joint review exercise was initiated by the Collector General’s Office and the Inspectors of Taxes throughout the country to confirm the amount of the liability where necessary, to identify any cases which were prima facie uncollectible and to decide on the most suitable form of enforcement action for collectible arrears. Where enforcement by the sheriff was considered the most appropriate action in the cases reviewed to date, certificates had been issued. Because of the number of cases involved in the review, priority was being given initially to those cases with the largest arrears and to progressively work downwards.

Mr. McDonnell.—This is the paragraph which has become a regular feature of my report in recent years. You will see that it shows there was an increase in the proceeds of enforcement in 1988 over 1987. There was just over £100 million collected in 1988 under the enforcement process as against just under £50 million in 1987. That is also reflected in the number of certificates returned paid in the same two years — 38,788 as against 16,500 in 1987. Also the number of certificates on hands of all the sheriffs at the end of 1988 show a reduction of 10,000, but in addition to the number of certificates in the hands of sheriffs one must not lose sight of the number of cases which are awaiting referral to the sheriffs. Even if the whole lot are taken — the number of cases on hands with the sheriffs and the number of cases awaiting referral — there is a significant reduction as between the two years. But I wonder whether that reduction was more apparent than real, because the issue of certificates by the Office of the Collector General was interrupted to some extent during 1988 by the knock-on effects of the amnesty and by some industrial action referred to later on.

Chairman.—We are taking paragraphs Nos. 24 and 25 together in view of the fact that this is where we are going to finish.

Mr. McDonnell.—The issue of the certificates to the sheriffs was interrupted and as I state in paragraph 25 I was concerned about whether it had been resumed on a comprehensive basis. To clarify a point on this question of certificates to the sheriffs; it has been mentioned before but it is no harm to mention it again. The number of certificates does not represent the number of taxpayers, and the Accounting Officer has often emphasised this. There could be a number of certificate for any one taxpayer.

In paragraph 24 I also referred to a matter which was of concern to the Committee in the past, which was the payover of the amounts collected by the sheriffs especially when they were collecting the moneys by instalments, and new arrangements were put in place for that which I referred to there. I would like to mention that my staff did visit the offices of two of the sheriffs, because my function is to see that procedures are in place for the assessment, collection and bringing to account of the revenue. So I thought that I should, in fact, expand the scope of my work to do that. I must say that I got excellent co-operation from the staff in the two offices we visited. There are a number of points which we still have to finalise in the cases concerned, but this is a new departure for me and I intend to continue to do it in the future.

Deputy Connor.—In relation to the Comptroller and Auditor General’s report and in relation to what we have in front of us here, the first thing that worries me is the number of certificates that were returned withdrawn or unpaid by the sheriffs — about 80,030 in the year we are dealing with. Could we deal with that question first of all? Is there an explanation for that? Why are they returned?

Mr. Curran.—I can give you a breakdown. For the year 1988, for example, 29,000 unpaid certificates were withdrawn; 11,600 were nulla bona — no goods; 2,200 persons ceased trading, which is really equivalent to nulla bona; 1,900 persons had left the address and another 12,500 had expired, 22,000 others would have been withdrawn for various reasons for review by the Collector General and so forth.

Chairman.—I take it it was notices that had expired and not the taxpayers.

Deputy Connor.—In all cases of withdrawal, it was for review by the inspector of taxes or by the Revenue Commissioners, generally speaking?

Mr. Curran.—Yes.

Deputy Connor.—They are not to be withdrawn for cancellation.

Mr. Curran.—That is true. If it is a debt which has to be followed up, then it would have to be written off formally, so that is not the end of it. If the certificate comes back, it has to be studied. That is not the end of the matter. A further decision has to be taken as to whether perhaps court proceedings might be in order or some other form of enforcement.

Deputy Connor.—Would you not agree that an extraordinary number of them have been either withdrawn, sent back to you, or whatever?

Mr. Curran.—That was true certainly in the past because we had the problem of estimated assessments and things were reviewed and moneys were received and these certificates had to be called back quickly because we did not want sheriffs going out trying to enforce things which, in fact, had been overtaken by events and were no longer due. So a lot of them had to be recalled in order that the case should be studied and cleared to make sure that it was, in fact, an appropriate case to go to the sheriff for enforcement. A number of these would have been re-issued once the case had been checked and verified; but particularly in relation to pre-amnesty cases. we had to be very careful before we re-issued certificates in those cases. We had to get the case checked out to make sure that the charge and the demand were soundly based. A number of these cases would be included in the sort of cases which were referred to the tax offices for review to make sure that the charge was actually a sound charge and properly founded. For current taxes, post-amnesty, we are sending out the certificates fairly quickly and we follow up very quickly.

Deputy Connor.—Is there a stemming in the flow of certificates that now need to be sent to the sheriff? Sheriffs were appointed some years ago. Obviously they would do somewhat historical work, carry-over arrears and so on. Do you notice that the numbers are declining purely and simply because some of the older arrears have either been dealt with, withdrawn or found to have no goods, or whatever? Is it a continuing phenomenon that the level of referral to the sheriffs continues at a steady level now that you would have two years at least when you would be dealing with current work in that year?

Mr. Curran.—The answer in a general way is that there is no overall diminution in the flow of certificates to the sheriffs because there was a particular situation during the amnesty year which distorts the figures. But in 1989 and in the current year, the position is that whereas some of the arrears cases have been cleared up and there is no need to send certificates in those cases, that is more than counter-balanced by the fact that we are now following up cases much more quickly and certificates are going to the sheriffs much more quickly. We are trying to get on top of the situation to make sure that arrears do not start building up again. Consequently, this keeps up the numbers of certificates referred to the sheriffs.

Deputy Connor.—By far the greatest number of certificates going to the sheriffs relate to income tax and, indeed, there are very high figures for VAT as well. Could you give us a typical example of the kind of person who is included in those very large numbers? Who, typically, would you find among the 23,741 people or, for VAT, 31,677 certificates for collection?

Mr. Curran.—I do not think we have a profile of your typical evader, if that is the sort of thing you have in mind. I could perhaps have a look at the situation and see if there is anything I can usefully say on the subject, but it would be across the range of self-employed taxpayers. A lot of those income tax people would be self-employed or traders of various sorts. I would not like to finger any particular section of the community.

Deputy Connor.—I do not wish you to. I felt that there might be, in these reports, a typical area where this kind of thing has become necessary.

Mr. Curran.—No, I think I can answer that question with confidence. This thing is fairly widespread across the community.

Deputy M. Ahern.—There are two items there in paragraph 24 relating to the payment over of moneys collected under the instalment arrangement within six months and, also, the procedure regarding the overall limit on balances to be held by each sheriff. Does somebody do any audits on these items to see that the procedures are being adhered to?

Mr. Curran.—We do not audit the sheriff’s offices or the sheriff’s accounts but we do monitor it from our end. We know the numbers of certificates, we know the dates they have gone and the dates they should be back, and we keep an eye on that and monitor it. The new procedures are working satisfactorily and the sheriffs are co-operating fully.

Deputy McGahon.—As one who is critical of the sheriffs, I have had to eat my words. Certainly the money they have brought in has been very revealing. I think the pendulum has swung from one extreme to the other and where there was a definite need in the early days for sheriffs to visit people, sheriffs are now coming out very quickly and in come cases, putting very heavy pressure on businesses that are struggling. I have asked you before for compassion in regard to small industries employing people in deprived areas of the country. I feel that discretion should be used as much as possible. I accept that if a case is very far advanced, perhaps the sheriff is justified. But issuing warrants very qickly in some cases where industries or companies are making genuine efforts to bring their arrears up-to-date is causing problems. The question of the sheriffs and the utilisation of the funds they receive and banking the money and getting substantial interest on it is one that places them in a unique and privileged position in this country. It is something that I do not believe they are entitled to. They are entitled to their percentage or their rate of payment. I feel that allowing them to lodge substantial sums of money to their own account is patently wrong. As a general average, could you say how much money would be in the sheriffs accounts at any particular time? What is the rationale for them lodging the money to their own account rather than to the State?

Mr. Curran.—There are various things there. I could not tell you how much would be in their accounts at any one time. We know the overall amount that passes through their hands in a year. This year it is of the order of £79 million to £80 million. As to whether they should be entitled to lodge it to their own accounts and have the interests on it, this came up at a previous meeting of this Committee and it was agreed that there was a major issue which needed to be looked at which was the whole basis of the remuneration of sherifs. My understanding is that that is ongoing and that it is being studied. In the meantime I would like to say that it is absolutely vital that there should be a sufficient incentive for the sheriffs to carry out their function. Whether this should be by way of poundage or by way of fee or by way of interest, I do not know. I have no view on that. The basic point is that, unless the sheriffs are properly and adequately renumerated and unless they have an incentive to collect the money, we will be back to the situation which obtained before they were appointed where enforcement was practically a dead letter.

Deputy McGahon.—That is a fair point. Could I ask what would be the average payment to a sheriff on one year? What would the average sheriff earn?

Mr. Curran.—I do not think we have that information. We can get it and send it on to you.

Deputy McGahon.—What would the highest paid sheriffs earn?

Mr. Curran.—These are questions of the remunerations of individuals and I am not sure that these should be published.

Deputy McGahon.—They are paid by the State.

Mr. Curran.—I would have to look that up. There are big variations.

Deputy McGahon.—Are they better paid than TDs?

Mr. Curran.—All we have would be the gross. We could probably get the gross receipts. We could calculate what the gross receipts were from poundage, but that would have to cover their staff and their office overheads and the people they employ to go out.

Deputy McGahon.—I would be interested to get that information another day.

Mr. Curran.—That is all part of the general debate about the remuneration of sheriffs which is going on in another place.

Chairman.—Could you send a note, Mr. Curran, on the question of the poundage and the interest they receive by holding on to amounts which they then forward to the State?

I note that the request by the Collector General that sheriffs should include in their monthly progress reports details of amounts paid over was not put in place in 1988 because of the amnesty. Is that in place now?

Mr. Curran.—Yes, and it is working satisfactorily.

Chairman.—There were 770,608 certificates which had been forwarded to the sheriffs because of the lack of resources available due to the handling of the tax amnesty. These certificates have not in fact been forwarded. Presumably they have since been fully discharged or collected in one form or another either through the amnesty or through the sheriff pursuing them?

Mr. Curran.—The ones that were withdrawn have been checked out and verified and those which were proper for enforcement were re-issued to the sheriffs the following year.

Chairman.—So a number of them would not have been proper because of the amnesty?

Mr. Curran.—That is correct. We had to check them.

Chairman.—There are still outstanding taxes. Despite the amnesty, some people still have not complied and there are still arrears of taxes due. What attitude do you take to that? Do you have any assessment as to what it amounts to? What are the penalties involved?

Mr. Curran.—As I said, the particular exercise which we had to carry out and which we are in the process of carrying out was to review arrears and especially the cases of the pre-amnesty arrears and the people who just ignored the whole thing. We have to investigate those to see whether there is any real liability or whether it is a live case or whether the persons have gone away. When we find that there is a proper charge there and that it has been verified then that goes to enforcement and will be pursued right down the line, including interest.

Chairman.—Could you give an estimate as to what the pre-amnesty outstanding taxes due might be?

Mr. Curran.—I only have a partial figure here. We have checked up on about £200 million of the arrears. I would say that about 20 per cent of that would be suitable for enforcement. In other words, of the £200 million about £40 million would be money which we feel we could enforce and pursue and we are doing that.

Chairman.—And it pre-dates the amnesty?

Mr. Curran.—It pre-dates the amnesty?

Chairman.—I think it is a good thing that the Comptroller and Auditor General is taking into account the question of visits to the sheriffs offices to carry out examinations. That is something the Committee raised in the past. I think it is an innovation which we must welcome. We will note paragraphs 24 and 25. We made a lot of progress today on some very technical information. We will conclude now and we will resume at some stage in the near future. The Clerk of the Committee will be in touch with your office, Mr. Curran.

The witness withdrew.

The Committee adjourned.

* Includes £100.9 million duties, taxes and levies deferred under EC regulations (1987 - £83.5 million). £7,042.9 million was paid into the Exchequer leaving a balance of £107.81 million compared with £82,63 million at the end of the previous year.

* Income Levy was discontinued with effect from 1986/87.

** Included in the income tax assessments for 1988/89.

* The balance outstanding in the years to 1986 includes a large element due in cases in liquidation/receivership and it is likely that little of this will be recovered. There are also amounts due from other companies and individuals that have ceased to trade, many some considerable time ago and in these cases the prospect of recovery is not good. The estimate of the amount of the balance likely to be collected takes these factors into consideration.

* A settlement case frequently comprises a number of items.