Two county councils make substantial tax settlements

Two county councils have had to make substantial settlements with the tax authorities because they failed to properly account for staff allowances.

Cork County Council agreed to pay the Revenue Commissioners €475,000 for three years of underpaid returns.

Its neighbouring authority, Kerry County Council, discovered that it had undeclared its bill and volunteered to pay the taxman €89,000 to cover 2009 and 2010.

Details of the payments emerged in reviews of the councils’ accounts carried out by the Local Government Audit Service.

In the Cork Co Council case, the settlement referred to a period between 2008 and 2011 when allowances were paid to some staff but were not taxed correctly.

The proposed payroll settlement was made by the council in early 2012 and was accepted by the tax authorities.

“The council confirmed its proposal to the Revenue Commissioners and agreed a payment of €475,000 in respect of matters arising from a review of the council payroll liabilities for the period 2008 to 2011,” the Local Government Audit Service said.

Separately, Kerry County Council also said that it made a voluntary disclosure after looking to regularise its payment of allowances. It told the audit service the Revenue Commissioners accepted the way in which its allowances had been paid over a number of years but that there were issues with a small number of staff accounts.

“The purpose of the review was to confirm compliance with the prevailing payroll taxation requirements and also to secure the approval of the Revenue Commissioners to the relevant council’s allowance schemes for certain categories of staff which had been in place for many years,” it said.

Cork County Council said it had no comment to make beyond its response in the audit. Kerry County Council also referred back to its response to the auditor.

Last year Revenue Commissioners’ chairwoman Josephine Feehily wrote to all State agencies warning them of their tax obligations.

There have been other instances of State agencies failing to pay their full taxes. In the education sector, County Cork VEC made a tax settlement in 2008 and has had to make another offer recently because of a failure to pay PAYE and PRSI at a Youthreach project.

It was also reported that the Department of Communications paid a €15,000 penalty to the taxman last year.