Revenue has seen ‘fraudulent behaviour’ under wage subsidy scheme, TDs told

Revenue has seen instances of “absolute fraudulent behaviour” by a small number of companies that have availed of the employment wage subsidy scheme (EWSS).

Revenue chairman Niall Cody made the remarks at the Dáil's Public Accounts Committee (PAC) meeting, which also heard that there is at least €2.8 billion in a "debt warehouse" scheme which was introduced to support businesses that had difficulty paying various taxes due to the pandemic.

The EWSS replaced the previous temporary wage subsidy scheme (TWSS) as part of the Government’s July stimulus package in 2020.

To avail of the EWSS a company’s turnover must currently be 30 per cent below what it was in 2019, before the Covid-19 pandemic.

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Mr Cody said there was an “exceptional level of compliance” under the old TWSS scheme which saw €2.8 billion in subsidies paid out while it was in existence. To date Revenue has so far recovered €251 million out out €324 million that was identified for recovery through compliance and reconciliation exercises.

Fine Gael TD Alan Dillon asked how many members of staff are involved in compliance for the EWSS and Mr Cody said it ran into the hundreds.

He said businesses in the EWSS have to complete eligibility review forms every month to tell Revenue about their turnover levels.

Mr Cody said the highest monthly payment of EWSS to employers was €452.6 million in July and this has dropped to €321 million last month.

He said Revenue has seen “absolute fraudulent behaviour under the EWSS” while adding it is “really small” in the context of the overall sums paid out.

Mr Cody also said: “But the fraudulent criminal cases – small number though they are – effectively are essentially robbery”.

Debt warehousing

Separately, Social Democrats TD Catherine Murphy asked about the debt warehousing scheme and Revenue's plans to phase it out, adding "we don't want to see a loss of viable businesses".

Mr Cody said the debt warehouse was a Revenue idea for helping businesses at the beginning of the pandemic.

It covers VAT, PAYE and PRSI liabilities up to the end of 2021 and there will be no interest on this debt if it is repaid.

As of the end of October, 98,000 individual Revenue customers were availing of the debt warehouse facility with the sum involved standing at €2.8 billion.

A key condition of availing of the scheme is that businesses continue to file their tax returns.

He said there are no maximum periods for repayment and “an appropriate arrangement” will be made with each business at the end of 2022.

Business must keep their tax returns up to date and paid next year.

On repayment, Mr Cody said it “will not be one size fits all”. “Some businesses will be in a position to start repaying on an instalment arrangement quicker than others.”

He said some of the debt will not be collectable and will be written off.

Separately, the PAC launched it's report on a number of matters relating to the Department of Social Protection.

It found that the JobPath scheme – which is ending this year – did not deliver value for money for the taxpayer.

PAC chairman Brian Stanley said the scheme – which was designed to assist people who are unemployed to re-enter the workforce – cost €247.9 million between July 2015 and October 2020 but just 22,000 people who participated remained in work after 12 months.

The PAC recommended that the department explore other avenues to provide better value through localised, non-profit driven employment services.