Post-Covid crackdown sees 82,000 tax clearance certs rescinded

An application for a tax clearance cert will normally expire after one year in the case of a grant application and within four years for all other applications. File Picture: Leah Farrell / RollingNews.ie

A post-Covid Revenue crackdown led to more than 82,000 tax clearance certificates being rescinded last year - a staggering 1,460% increase on the previous year.

New figures show that a total of 5,290 tax clearance certs were rescinded in 2021 – 2,260 in the first half of the year and 3,030 between July and December.

But that rocketed by over 1,400% last year with 985 tax clearance certs rescinded in the first half of the year, and the figure surging to more than 81,642 between July and December, bringing to 82,626 the total number of tax clearance certificates rescinded across 2022.

Revenue was unable to give a breakdown of how many of these were businesses.

The figures were provided in response to a parliamentary question from Fianna Fáil TD Padraig O’Sullivan who expressed surprise at the massive increase and said he had sought a more detailed analysis of the figures. 

“Fine, if this is a reflection of a resumption of Revenue’s normal pre-Covid periodic reviews. But that’s of little consolation to a business that is still recovering from the impact of Covid and that may still be warehousing debt," he said. “I would be calling for some level of leniency from Revenue in cases like that.” 

Tax clearance is required for various purposes, such as renewal of a variety of licences and permits, public sector contracts, grants, subsidy payments and Government supports.

While a business may have its tax clearance rescinded due to compliance issues, it can also be rescinded for reaching its expiry date.

An application for a tax clearance cert will normally expire after one year in the case of a grant application and within four years for all other applications.

Where applicants address their compliance issues and re-apply, they can regain their tax clearance status.

Individuals who are not running a business may need tax clearance to receive a grant or some other government or local authority support.

These are once-off and are generally not renewed but they are included in the rescinded numbers for 2021 and 2022.

Mr O'Sullivan was told that following the outbreak of the Covid-19 pandemic in March 2020, Revenue took several key policy decisions to help businesses cope with the “unprecedented public health and economic emergency”.

One of those policies was to allow what were tax-compliant businesses at that stage in early 2020 to retain their tax clearance status until mid-2022.

Finance Minister Michael McGrath said Revenue carried out three targeted campaigns in 2021, based on risk, to identify and engage with “cohorts of taxpayers” who had outstanding returns or other compliance issues.

“Where the businesses did not file the outstanding returns or address other compliance issues after being given a reasonable opportunity to do so, Revenue rescinded their tax clearance,” he said.

“Revenue commenced a staged return to normal periodic review of tax clearance in mid-2022 for the entire case base.

“The process was resumed on an incremental basis in view of the large number of cases involved and was completed by November 22, 2022.” 

The minister said the increase in the figures in the period July to December 2022 can be attributed to the phased return to normal, pre-Covid periodic reviews by Revenue.