Nama has been forced to make a settlement payment with Revenue totalling €1.9 million, including €600,000 of penalties and interest.
In correspondence from Nama to the Dáil's Public Accounts Committee (PAC) on Tuesday, an underpayment of VAT was disclosed and it was confirmed that Nama was hit with charges for breaking the rules.
The letter, seen by the Irish Examiner, said the €1.9 million payment came about on foot of an “unprompted voluntary disclosure” by Nama to Revenue in 2018.
“The unprompted voluntary disclosure primarily related to underpayments of VAT on certain services received by National Asset Loan Management DAC ('NALM') in respect of NAMA-secured assets located abroad where invoices were settled directly by debtors or their lawyers,” the letter stated.
Nama has told the PAC that invoices were settled directly at source by debtors or their lawyers and, as a consequence, were not subject to Nama’s normal direct payment process.
In 2017, Nama identified an invoice which was settled at source by a debtor but should have attracted a reverse-charge obligation. Consequently, an underpayment of VAT arose.
In its letter to the PAC, Nama said it “immediately initiated a detailed review” of invoices for services received by NALM from abroad and not processed by the Nama accounts payable function.
Nama said its review, which took a number of months to complete, identified and collated all relevant invoices that were not paid through the Nama accounts payable system. The VAT that should have been paid on these invoices was quantified and included in the voluntary disclosure, Nama said.
As part of its review, payment of €1.9 million was made to Revenue, of which €600,000 was in respect of interest and penalties. Nama said the voluntary disclosure was not financially material in the context of the overall Nama group corporation tax of €113 million in 2018.
Despite falling foul of Revenue rules, Nama said is committed to the highest standards of tax governance and seeks to ensure that it is fully compliant with Irish tax legislation: “We take our tax compliance obligations pursuant to the Code of Practice for State Bodies very seriously."
The disclosure was sent to Revenue on October 18, 2018. The Comptroller and Auditor General was notified of the existence of the disclosure during the course of the 2018 year-end audit of NAMA.
In discussions with Revenue, following the submission of the disclosure, they confirmed that they were satisfied with the content of the unprompted voluntary disclosure, the work performed by NAMA to identify same and the background information provided.
The letter confirming acceptance of the settlement amount was received from Revenue on March 21, 2019.
Nama has claimed that its internal control processes have been enhanced to ensure that a similar underpayment does not arise in the future:
Responding to the letter, PAC member and Social Democrat TD Catherine Murphy said the settlement is a sizeable one but does appear to be a genuine mistake and nothing more sinister.
A major flaw in the laws prohibiting the resale of properties taken over by Nama to the developers behind them emerged at the PAC last month.
Members of the Dáil’s Public Accounts Committee (PAC) said they are certain that developers are back in control of certain properties having bought them back at a major discount.