Tax officials wrote off €129m in unpaid levies and PRSI

REVENUE COMMISSIONERS:THE REVENUE Commissioners wrote off €129 million in unpaid taxes and PRSI in 2008, up almost 10 per cent on 2007, with most of the money written off in relation to struggling or insolvent firms.

The CAG report shows that some €113 million of the write-offs “arose in cases where businesses had ceased or encountered difficulties”.

The balance of €15 million relates to cases where the Revenue was unable to locate the taxpayer, where the Revenue decided not to pursue the taxes on compassionate grounds, and where a decision was made that it was uneconomic to pursue the amount outstanding.

The largest single amount written off in tax last year was €9.9 million in respect of employer’s PAYE/PRSI and VAT, which was owed by a liquidated firm in the security industry. There were eight other cases where the write-off exceeded €1 million.

The €129 million in write-offs of tax and PRSI in 2008 compares to a figure of €117.6 million the previous year.

The report also highlights higher tax collection risks, with 2008 seeing an increase of €575 million in the amount of owed tax that was outstanding as of March 2009.

According to the report, Revenue chairwoman Josephine Feehily informed the CAG that the dilemma for Revenue was to distinguish between businesses that will not pay, could not and never would pay, and firms that were viable but unable to pay just now.

Mr Buckley’s report also highlights that he has questioned the Revenue in relation to an increase in the value of repayments of certain categories of tax in 2008, despite a fall in the value of the receipts received.

Some €9.2 billion – 18 per cent of the gross taxes and duties collected last year – was repaid to taxpayers, mainly as VAT or income tax.

Repayments of income tax, corporation tax, capital acquisitions tax and capital tax all increased in 2008, despite the fall in gross receipts for those categories of tax. Gross income tax receipts, for example, fell by €195 million, while repayments increased by €192 million.

The Revenue said this was due to an increase in payments in tax relief at source for mortgage interest and medical insurance, as well as more taxpayers making claims for credits and reliefs.

The higher repayments of self-assessed income tax was probably the result of taxpayers overestimating their tax liability when paying preliminary tax.