Strategy 1.1 Ensure efficient collection and timely compliance

Internationally Ireland is among those countries that make it easiest for taxpayers to pay their taxes and comply with the tax system. In the 2009 joint World Bank and Pricewaterhouse Coopers survey on "Paying Taxes" Ireland ranked highest among EU countries in terms of making it easy to pay taxes and in having the least burdensome compliance requirements.

This type of survey is a reminder of the importance for the economy generally, and for inward investment in particular, of having a tax system that is easy to comply with, that is responsive to the needs of taxpayers and other stakeholders, and that encourages and actively promotes voluntary compliance.

Output	Result
1. Annual targets for tax and duty collection delivered.	Table 1 and Table 2 show Gross and Net Receipts respectively. Collection performance in 2009 was below target by €1,288 million (-3.7%) and actual yield in 2008 by €7,794 million (-19%): Value Added Tax: - The shortfall reflects lower than expected levels of consumer spending throughout the year. Sectors such as wholesale/retail, real estate, manufacturing and transport/communications were particularly weakened. Income Tax/Income Levy: - While combined Income Tax & Levy receipts came in €636 million below target, some €216 million of the shortfall is attributable to the introduction during 2009 of an age-related tax credit into the Tax Relief at Source (TRS) system in respect of health insurance. This cost was largely offset by a boost to stamp duty receipts of €197 million in 2009 from the introduction of a levy on health insurance companies. The shortfall in PAYE tax also reflects a weaker economy in 2009 than had been projected at Budget time, resulting in labour market conditions being less favourable than expected. Excise: - In 2009, Excise net receipts were €4,901 million which is €99 million (2.1%) ahead of the Budget estimate and €699 million (12.5%) less than in 2008. At the itemised level, VRT was the only commodity below target. VRT with receipts of €375 million was €21 million (5.3%) below target and €746 million below receipts in 2008. Total new car registrations in 2009 numbered 57,337, which was 94,611 (62.3%) less than in 2008. Alcohols receipts were €968 million, exceeding target by €18 million (1.8%) and €102 million below receipts in 2008. The Oils sector with receipts of €2,194 million, exceeding target by €51 million (2.3%) and was €24 million higher than the yield in 2008. The Tobacco sector, with receipts of €1,217 million, yielded €38 million more than expected and €45 million more than in 2008. Corporation Tax came in €149 million above target but receipts were boosted by a significant once-off payment of €354 million from a large financial company. The negative impact on corporate profitability of the recession and the downturn in the global economy, especially in the financial, manufacturing, wholesale/retail and real estate sectors, impacted on the underlying performance of CT. Stamp Duties came in some €23 million ahead of target but receipts were boosted by a yield of €197 million from the introduction of a levy on health insurance companies. Some 34% of the expected yield from property transactions (€171m) failed to materialise due to diminished property values and reduced numbers of transactions while yields from the levies on non-life and life assurance fell short of target by 50% (€95m). These shortfalls were counterbalanced to some extent by a surplus in the yield expected from share transactions and other stamp duties which exceeded target by €92 million. Capital Gains Tax: - The shortfall and relatively low levels of yield reflect the ongoing impact of the downturn on the property and shares markets. CAT: - The shortfall is attributable to the impact of the downturn on the value of property and shares. Customs receipts were €22 million (9.5%) below the Budget estimate and €37 million less than in 2008.
2. More efficient collection of tax and duty debt.	The economic and financial environment within which Revenue and its customers operate deteriorated significantly over the last two years. The outstanding tax debt, which is a reasonable substitute measure of the financial distress that many businesses and individuals are experiencing, has increased over the past 3 years by 1 billion euro, or 91 % ( from €1.1 billion to €2.1 billion ). This reflects the challenge for businesses created by very difficult trading conditions, significant cashflow pressures and very limited credit facilities. Debt available for collection in 2009 was €1,443 million, up from €1,233 million in 2008. Debt available for collection as a percentage of total gross receipts was 2.8%, up from 2.1% in 2008. Debt over 3 years old available for collection in 2009 was €366 million, up from €290 million in 2008. In 2009, a total of €221.5 million was deemed to be uncollectible and was written off in accordance with established guidelines. This represents a €92.55 million (72%) increase on the 2008 figure. Approximately 60% is made up of insolvency cases i.e. receivership, bankruptcy and liquidation and examinership cases.
3. More taxes & duties paid, & returns and declarations filed, on time.	The number of payments received for 2009 was 3,983,711 compared to 4,397,822 in 2008. Table 3 shows the average percentage of tax collected by the due date. Table 4 shows returns compliance for large, medium and all other cases. Revenue considers that maintaining compliance at the levels shown in Table 4 represents a significant achievement in 2009 in light of the extremely challenging economic and financial environment in which businesses have been operating. We are committed to maintaining our focus on achieving high levels of compliance again in 2010. The charging of interest on late payment of tax is the primary method used to maintain, and where possible improve, timely payment compliance. The amount of interest collected in 2009 was €67 million, a decrease of €12 million on the previous year. This is separate from interest charged and collected as a result of Revenue's Audit and Investigation Programmes. The number of Sheriff Enforcements was 38,790 the number of Solicitor Enforcements was 6,832 and the number of Attachments was 3,199. See See Table 5 Collection Enforcement Programmes 2009. Revenue appreciates that the current economic and financial environment has made it more difficult for some businesses to meet their tax payment obligations in a timely fashion. In particular, it is clear to Revenue that certain businesses that previously made their tax payments on time and that are fundamentally viable businesses have experienced serious cash flow problems. Revenue has worked with many of these businesses to restore timely compliance as quickly as possible. This has contributed to a certain reduction in the level of routine enforcement activity by Revenue in 2009 compared with 2008. However, the overall significant increase in insolvency activity through liquidations, receiverships and examinerships in 2009 in some cases arising directly or indirectly from Revenue collection and recovery action has also contributed to the reduction in the more routine enforcement actions by Revenue. In the small number of cases, where non-compliant customers fail to respond to standard collection enforcement measures, Revenue will undertake dedicated enforcement action. During 2009 such action included 4 bankruptcies, 3 garnishee orders, 1 mareva injunction, 1 committal order, 1 committal warrant executed and utilisation of the Commercial Court for the first time. During 2009, Revenue, as an integral part of its overall approach to debt collection and enforcement, continued to be actively involved in company liquidations, receiverships and examinerships. Overall, in 2009: 1,147 companies were wound up via Creditor Voluntary Liquidations, more than double the 556 recorded in 2008. Revenue staff attended 362 creditor meetings and continued an active role as members of Committees of Inspection. Revenue issued 110 notices under Section 214 of the Companies Act 1963 which ultimately resulted in 39 instances where Revenue petitioned the High Court for the appointment of a liquidator. The number of Receiverships grew to 192 (compared to 48 in 2008). There was also a continued increase in the number of Examinerships (91 interim examiners appointed in 2009 as against 72 in 2008). Revenue continues to financially support liquidators in selected cases, particularly where the liquidator has evidence of fraudulent or reckless behaviour or there are grounds to pursue actions against rogue directors. Close liaison was maintained with the Office of the Director of Corporate Enforcement and the Official Assignee's office.

**Table 1: Total Amount Collected/Gross Receipts**
Taxhead	2009 €m	2008 €m
Income Tax & Income Levy	15,068	16,593
Value-Added Tax	13,963	17,992
Corporation Tax	5,335	6,046
Excise	4,950	5,703
Stamp Duties	1,023	1,813
Capital Gains Tax	606	1,494
Capital Acquisitions Tax	268	351
Customs	212	260
Collection on behalf of other Departments/Agencies	9,318	9,910
Total	50,743	60,062

Note: Any apparent discrepancies in totals are due to rounding

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**Table 2: Total Revenue/Net Receipts**
Duties, Taxes & Levies	2009 Net Receipts €m	2009 Budget Estimates €m	2009 Net Receipts +/- Budget Estimates €m	2008 Net Receipts €m
Income Tax - PAYE	8,488	8,994	-506	10,069
Income Tax from Self-Employed and certain other non-PAYE sources[1]
Direct Payments	987	1,007	-20	1,657
Less other non-PAYE Repayments	-141	-124	-17	-138
Net Yield (see footnotes)	846	883	-37	1,519
Deposit Interest Retention Tax [2]	614	705	-91	654
Witholding Tax (fees) [3]	597	605	-8	604
Dividend Witholding Tax [4]	156	135	21	350
Income Levy	1,138	1,153	-15	-
Income Tax total	11,839	12,475	-636	13,196
Value Added Tax [5]	10,638	11,420	-752	13,432
Excise [6]	4,901	4,802	99	5,600
Corporation Tax	3,889	3,740	149	5,071
Stamp Duties	1,003	980	23	1,763
Capital Gains Tax	545	625	-80	1,424
Capital Acquisitions Tax	256	295	-39	343
Customs [7]	208	230	-22	245
Total	33,279	34,567	-1,288	41,074

Note: Any apparent discrepancies in totals are due to rounding of constituent figures

Income Tax from the Self-Employed: The figures shown under this heading are net of repayments made directly to the self-employed but are gross before netting off repayments to other non-liable individuals, charities, pension funds and foreign residents for tax deducted at source under various arrangements. Such repayments are normally made out of the non-PAYE collection and, if not adjusted for, would have the effect of understating the yield attributable to the self-employed. The repayments in question are accounted for in Table 2 under the sub-heading "Other non-PAYE repayments".
Deposit Interest Retention Tax: tax deducted from interest arising on deposits with financial institutions.
Withholding Tax: tax deducted at source from fees for professional services provided to state agencies and certain other designated bodies.
Dividend Withholding Tax: withholding tax on certain dividend and other profit distributions made by companies resident in the State.
The VAT receipts in 2009 are composed of €12,953 million of internal VAT and €1,010 million collected on imports, less refunds of €3,325 million.
A tobacco levy of €168 million, which is directly paid over by Revenue to the Department of Health & Children, is included in the Excise figures for forecasts and receipts in Tables 1 and 2, even though it is not included in the end-year Exchequer Returns as tax revenue.
75% of the amount collected is paid to the EU as part of the Irish contribution to the EU Budget known as "Own Resources". The remaining 25% is retained by the State as collection expenses.

The figures for 2009 Net Receipts in Table 2 are some €69 million higher than the comparable figure for Tax Revenue receipts published in the end-2009 Exchequer Returns because of timing and accounting procedures.

The payments made by Revenue into Tax Relief at Source (TRS) schemes for mortgage interest and medical insurance are netted off proportionately in arriving at the yield of income tax from PAYE and the self-employed.

Chart 1: Indirect Tax Net Receipts

A total of €15,539 million was collected in net VAT and Excise receipts in 2009.

Chart 2: Direct & Capital Taxes Receipts

A total of €17,532 million was collected in Direct and Capital Taxes receipts in 2009.

Income Tax comprises receipts from PAYE, Income Tax from the self-employed and certain other non-PAYE sources, Deposit Interest Retention Tax, Withholding Tax and Dividend Withholding Tax.
Capital Taxes include receipts from Capital Acquisitions Tax and Capital Gains Tax.

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**Table 3: Average Percentage Of Tax Collected By The Due Date**
Tax	2009	2008
PAYE/PRSI	94%	94%
VAT	90%	90%
Preliminary Income Tax (Non PAYE)	97%	96%
Capital Gains Tax	85%	89%
Corporation Tax	91%	93%
Relevant Contracts Tax	79%	78%

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**Table 4: Return/Payment Compliance**
Case Size*	Due Month Compliance End 2010 Target	Due Month Compliance 2009 Actual	Due Month Compliance +1 End 2010 Target	Due Month Compliance +1 2009 Actual
Large Cases	95%	92%	99%	96%
Medium Cases	90%	85%	95%	93%
All Other cases	75%	72%	85%	81%

* Definition of Terms:

Timely compliance is defined using risk criteria and is calculated on a weighted basis for the main taxes (employers PAYE/PRSI, VAT, Corporation Tax, Income Tax and Relevant Contracts Tax).
A Large Case is a customer paying over €500,000 in a year, a Medium Case is a customer paying between €75,001 and €500,000 and an Other Case is a customer paying €75,000 or less.
Due month compliance represents tax paid in the calendar month in which it is due.
Due month +1 represents compliance within one month of the payment-due date.

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**Table 5: Collection Enforcement Programmes**
	2009			2008
Enforcement Programme	Number	Value (€m)	Yield (€m)	Number	Value (€m)	Yield (€m)
Solicitor	6,832	297.7	46.2	6,579	€237.2	€65.1
Sheriff	38,790	697.4	214.3	44,090	€675.4	€257.8
Attachment	3,199	205.5	22.2	2,362	€131.4	€28.5
Total	48,821	1,200.6	282.7	53,030	€1,044.0	€351.4

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