Almost all requests for the remission of interest and penalties incurred when income tax was not paid have been approved.
The 2015 annual report of the Revenue Remissions Supervisory Board, tabled in Parliament last Monday, indicated the taxman approved 1,169 of the 1,200 processed demands for remission.
“Far too many taxpayers were obviously aware that the use of the term ‘cash flow problems’ in their remission requests would entitle them to remissions,” remarked the supervisory board.
It added that the situation where the “excuse – cash flow problems – is blindly accepted for the granting of remissions” was “unacceptable”.
Far too many taxpayers were obviously aware that the use of the term ‘cash flow problems’ in their remission requests would entitle them to remissions- Supervisory Board
Concluding its annual report, the board commented that the legal provisions empowering the Commissioner for Revenue to remit interest and penalties when tax is not paid “due to a reasonable cause”, were “rather vague”.
It queried what would qualify as a reasonable cause and the tools available to the taxman to decide upon the veracity and reasonableness of such requests, which sometimes include a “touch of arrogance” by the taxpayers, who threaten to sack their employees if their demands are not accepted.
The requests ballooned from nine in 2003, to 457 the following year, reaching 732 in 2015.
Over €2 million in additional tax and interest tied to late payment of income tax was pardoned in 665 agreements concluded last year.
Six hundred and twenty-four requests for pardon from VAT-related penalties and interest were submitted last year, of which 263 were processed and 154 were entertained.
While tax cannot be pardoned at law, a set of four legal notices published between 2013 and 2015 provide for the remission of administrative penalties and interest incurred when income tax, VAT and the duty on documents and transfers are not paid.
The Revenue Remissions Supervisory Board was introduced to the local statute books in 2014 to oversee the pardons administered by the Inland Revenue, Value Added Tax and Duty on Documents and Transfers departments.
This board, appointed by the finance minister, is chaired by a person with experience and expertise in financial and revenue matters. While the chairperson cannot be a public officer, the members are chosen from a list of public service employees submitted by the Commissioner for Revenue.
Remissions are staggered ac-cording to internal rules followed by the respective departments.
When a taxpayer pays the income tax liability, an 80 per cent remission of the interest and penalty liabilities is applied. This remission falls to 60 per cent when half of the tax is paid, with a commitment that the remaining half be settled within 12 months.
Thirty per cent is pardoned after the payment of 20 per cent of the tax liability together an undertaking to settle the remaining dues over 36 months from the date of the agreement.