Revenue ‘cannot legally waive tax liability’

REVENUE does not legally have the power to waive the millions of euro in back taxes owed to it by 115,000 pensioners, a leading accountancy expert has claimed.

According to Aidan Clifford of the Association of Chartered and Certified Accountants, without special legislation passed by the Dáil, Revenue does not have the power to forgive any taxes, whether it is PAYE, VAT, corporation tax or household charge taxes.

“Revenue has some discretion over interest and penalties being imposed on underpayment, but not on the absolute amount of tax due.

“If the Government were to forgive the underpaid tax in this instance, they will need to pass emergency legislation to do so and the legislation will need to take account of pensioners who correctly paid their tax as well as those who underpaid.”

Revenue has said its emphasis will be on tax owed by the pensioners from 2012 onwards. It said it might be uneconomic to go after those who have only underpaid by a small amount.

“We would be looking to target our resources at people who have a higher exposure,” said Revenue’s Declan Rigney. “This is not an amnesty. We need to do more analysis on the groupings involved and see what the implications are.

“For example, there will be people to whom we have sent out a tax return. They may have returned that to us and not disclosed the social welfare pension. Or we have sent out the return of income and they have not sent that back to us. We need to look at those cases, we need to do the analysis, we need time to do that.”

Revenue would not put a figure on how much would be raised by going after the taxes owed by the pensioners. However, even if it were to only ensure it started receiving all of the money owed from now on, it would still amount to a significant windfall for the exchequer.

There are at least 2,500 instances where pension recipients are in receipt of annual incomes in excess of €50,000.

The annual additional liability could reach €4,400 for a single person and €8,800 for a couple.

Age Action has urged the Revenue Commissioners to launch a public information campaign in the coming months to highlight steps pensioners need to take in order to remain tax compliant.

“The letters sent out to 115,000 pensioners have caused anger and anxiety among older people who previously believed they were tax compliant and who had been tax compliant all their working lives,” said Eamon Timmins, group spokesman.