A €1.3m tax bill has forced a local authority to review its fleet operations and replace some vehicles to ensure it can deliver an efficient and cost-effective 24-hour emergency response service.
Cork City Council says it has replaced most of its larger vehicles with two-seater vehicles in the wake of Revenue’s decision on the application of benefit-in-kind (BIK) legislation to its fleet.
And arrangements have also been made to ensure that its remaining three-seater vehicles are parked-up at a central location overnight, rather than be taken home by on-call staff after hours.
The news emerged after the Irish Examiner revealed how the local authority has had to pay €1.3m to settle additional tax liabilities which arose after a lengthy Revenue audit.
After an initial Revenue query to the council in October 2016, Revenue launched a full audit as the council conducted ‘self-reviews’ for the period 2014 to 2017.
Following a series of meetings and negotiations, Revenue rejected the council’s interpretation of tax legislation, which eventually prompted the council to make a series of unprompted qualifying disclosures to settle additional tax liabilities totalling €1.3m.
Most of the liability was linked to the under-calculation of PRSI on JobBridge employees who went on to secure full-time jobs with the council, and to the application of benefit-in-kind to some 140-vehicles in the council fleet.
In a statement, the council said drivers and foremen were allowed to take vehicles home for a "number of operational reasons" to ensure delivery of a 24/7 service in an efficient, cost-effective and flexible manner.
Many of these workers were involved in the coordination of responses to severe weather emergencies or urgent housing-related repairs.
“In delivering services, a high degree of mobility and flexibility is required, for the transportation of both workers and equipment/supplies to various sites,” the council said.
“The council operates and manages a fleet of over 140 vehicles, ranging from light commercial vehicles to small vans.
But since the Revenue BIK ruling, the council has had to review its fleet operations.
“Vehicles with capacity to carry more than two people are now required to be parked up centrally at night. To retain an appropriate out-of-hours response capacity, it has become necessary for the council to replace the majority of larger vehicles with two-seater vehicles.”
The council said the settlement was funded by payroll savings achieved due to time lags in the recruitment process, and that it has had no impact on the 2019 budget.
The council said it has conducted an internal review following the audit and has taken the necessary corrective action to ensure full compliance and that procedures have been put in place to ensure there will be no recurrence of the tax issues.