€1.3bn in unpaid taxes foregone since 2011

The Revenue Commissioners haven’t pursued almost €1.3bn in unpaid tax over the past five years, new figures show.

Revenue may forego unpaid taxes for a number of reasons, including when a business ceases trading or becomes insolvent.

The vast majority of the 700,000 or so cases involved small sums of up to €100, which Revenue deemed “uneconomic to pursue”, however.

According to Finance Minister Michael Noonan, approximately 94% of all instances where tax was foregone between 2011 and 2015 centred on cases of between €1 and €100.

“The only circumstance where tax is written out, or forgone, is where a business or taxpayer is adjudicated insolvent, has ceased to trade with no assets, where collection is uneconomic to pursue, or where collection would cause undue hardship.

“Where tax is written out in these circumstances, the associated interest automatically falls, but could be reinstated along with the tax if the taxpayer’s financial circumstances subsequently improved,” said Mr Noonan.

Despite making up the bulk of cases where tax has been foregone since 2011, cases where Revenue deemed the debts uneconomic to pursue accounted for just 10% of the value of all write outs, said a Revenue spokesperson.

“Amounts in the category ‘uneconomic to pursue’ averaged approximately 10% of the value of all write outs over the last five years. The majority of this relates to small debts (often less than €100), where the cost of collection would be greater than the actual debt.

“Additionally, in some circumstances, the potential cost to Revenue in terms of time and money must be considered in the light of the chances of success.

"A customer under this category may have arrears of tax, but no assets of sufficient value to be seized, no source of income to be attached, and solicitor action would be costly.

"In such cases, a decision may be made that it is uneconomic to proceed,” said the spokesperson.

The largest amount wrote out by Revenue during the period was €321m in 2011. This fell each year, to €170m in 2015, which represents less than 1% of the total amount collected that year.

With more than 2,000 company insolvencies recorded in 2011, it’s perhaps surprising that the total amount foregone wasn’t even greater. Similarly, close to 2,000 insolvencies were recorded the following year and more than 1,500 in 2013.

The figures were released to Fine Gael TD Jim Daly in response to a parliamentary question on the collection of interest on late payments to Revenue.

The minister advised Mr Daly that the figure for the number of instances where Revenue chose not to pursue interest payments since 2011 was not available, as such records are not kept by Revenue.

He did, however, disclose that €427m in interest was gathered by Revenue during that timeframe. Interest payments for late payment peaked last year when €101m was paid to Revenue.

“[Interest payments] are designed to compensate the exchequer for loss of revenue through late payment of tax, to encourage timely payments in future, and to ensure equity for the majority of taxpayers who pay on time.

"For the years 2011 to 2015, Revenue collected interest amounts of €83m, €63m, €92m, €88m and €101m respectively under these programmes,” said Mr Noonan.


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