This paper has reported that Cork City Council has been audited by the Revenue Commissioners and made a settlement of well in excess of €1m for underpaid taxes.
The Council's chief executive expressed concern that flexibility in responding to emergency call-outs might be compromised.
That’s because new parking arrangements will be required for council vehicles so as to ensure that a taxable benefit in kind - or notional additional wages based on the benefit of being able to use a van - doesn’t apply to their drivers.
This incident raises many questions about the relationship between State and semi-state bodies and local authorities, and the extent to which they are seen to be assisting or hampering each other's operations.
In fact, there are clearly-defined tax rules for employees having the use of vehicles provided by their employers, and also clearly-defined rules for when vehicles like vans can be used by employees without attracting an income tax charge.
Revenue has to treat all taxpayers, private sector or public sector, in the same way otherwise unfair advantages could be created.
However, the other issue highlighted by the Cork City Council case is the need for the public sector to be just as aware of Revenue rules and regulations as their private sector counterparts.
While it may appear wasteful for Revenue to pursue public bodies for tax, interest and penalties, it is of fundamental importance to the fairness of the tax system that they would do so.
Taxpayers need to know that they are treated equally and fairly, whether they are public sector or private sector workers.
Public authorities most usually get their taxes wrong where staff travel expenses or benefits are involved. Other agencies and government departments have had, from time to time, made settlements with the Revenue Commissioners as reported by the Comptroller and Auditor General.
The difficulties encountered by Cork City Council are by no means unique.
Where things do go wrong for the public sector in tax terms, it is most frequently in those areas where the rules are not black and white – whether travel is or is not really business travel, or whether the use of car or van falls within the definition of what is a taxable benefit.
A big part of the complexity, here, lies in that many of the rules governing benefits and expenses date back 100 years or more. We have been slow to modernise these.
The rules on transport and travel date back to an era when the typical job involved people going to a workplace, and travelling on from there if they had to when working with a customer or on a site.
Nowadays, more and more people travel from their homes - which often are also their places of work - to the customer or site without first going to an office or a depot.
While some changes to the benefit rules have been made, for instance to reflect the fact that some people require the benefit of additional security arrangements at their homes, the fundamental rules devised a century or so ago remain the same.
The logistics required to stay out of the tax trap which Cork City Council now faces is disruptive for all concerned, but in the long-run the alternative – a different approach for the public sector versus the private sector - would be much worse.
If a solution is to be found, it must lie in revising old-fashioned tax rules which no longer match the realities of the modern workplace.
Brian Keegan is director of public policy and taxation at Chartered Accountants Ireland