Opening Statement of Norman Gillanders, Assistant Secretary, Office of the Revenue Commissioners
Joint Committee on Finance and the Public Service
Allowances and reliefs for taxpayers - 24 January 2007
Introduction
1. I would like to thank the Committee for the invitation to this meeting and for the opportunity to make this opening statement. I am Head of Revenue’s Operations Policy and Evaluation Division. My Division includes the Customer Service policy branch. I’m accompanied today by Mr. Declan Rigney, the Principal Officer in charge of Customer Service policy. Customer Service policy of course includes PAYE and my Division has overall responsibility for improving our services to PAYE taxpayers.
2. I would like to give you a quick summary of where PAYE is today and how Revenue handles and facilitates claims for reliefs and credits.
3. I would also like to comment in passing on some statements made at the Committee’s session last Wednesday, which appear to us to be either incorrect or give a mistaken impression – for example, in relation to the PAYE Form 12, the Med1/Med 2 claims procedure and the responsiveness of our phone service.
Context: Size/complexity of the PAYE taxpayer base and seasonal peaks
4. In recent years, Revenue has put a major effort into modernising our PAYE computer systems and contact channels and making it as easy as possible for people to claim their due entitlements. This is in the wider context of a very significant growth in the number of PAYE taxpayers (including a large immigrant component) and far greater mobility in the workforce, with many more people now changing jobs frequently and holding multiple part-time jobs. All of this has undoubtedly put greater pressure on PAYE administration. And the changeover to a calendar tax year from 2002 has had the effect of increasing that pressure during the first quarter of every year: the issue of now almost 2.5 million tax credit certificates in January/February each year (incorporating budget changes finalised only a few weeks beforehand) naturally generates significant contact with Revenue; and this also tends to be the peak time for claiming repayments/reviews for the previous tax year.
Claiming Credits/Reliefs by Phone
5. We began reforming the administration of PAYE in the late 1990s. In 1999 we took an important decision in regard to claims for tax relief. We eliminated, as far as possible, the need for written claims for tax relief and began to encourage claims over the telephone. This was more convenient for taxpayers and also more efficient for us. I emphasise this Chairman because I am surprised to say the least at the overemphasis on claim forms and tax returns at last week’s meeting and in subsequent media comment.
6. Since 2003 Revenue has had four regional lo-call phone numbers in operation where telephone claims for relief can be made. The service is backed up by modern telephone (VOIP) and scanning technology; for example, as a call comes in the computerised phone system automatically opens the taxpayer’s computer record and displays it on screen to our caseworker. A scanned copy of any recent letter from the taxpayer is also displayed on screen. This is up there with the most advanced customer service technology in use in Ireland today.
7. Typically the PAYE 1890 service handles 50,000 calls per week. I assure the Committee that there is no difficulty in getting through to our PAYE telephone service: we are now consistently answering about 90% of calls offered. In practice, this means that most people get through the first time they ring and almost everybody gets through on the second ring. In fairness to the many dedicated Revenue staff who man this service, claims that it is breaking down simply do not accord with the facts.
On-line and other self-service initiatives
8. At the end of 2005 we completely rebuilt our PAYE computer system so that we could extend full on-line facilities (ROS) to PAYE taxpayers. We launched this in the middle of last year. So contrary to the impression conveyed last week that ROS is not available to PAYE taxpayers – it is, and has been since last May.
9. In the last two years, we have also brought in a range of other self- service options for those who do not avail of the full PAYE ROS service, for example;
- PIN-based self service channels for claiming a number of tax credits (e.g. Bin Charges, Trade Union Subs, Home Carer Credit, Age Credit, Dependent Relative Credit) by mobile phone texting, voice-recognition telephony, or the revenue.ie website.
- These PIN-based services also allow for self-service change of address, tracking correspondence with Revenue and forms/leaflets requests.
Of course, we have kept the traditional channels of contact. Taxpayers can still write to us or call into our public offices and hundreds of thousands of people do every year. We are significantly extending and upgrading our Dublin information centre in O’Connell Street to deal with a big increase in “walk in” customers. The management of the Dublin region plans to open an “internet café-type” facility in the O’Connell Street office as part of the refurbishment and extension of the building. This is due for completion within a few months.
Forms
10. Chairman, I would now like to comment briefly on two forms that featured prominently in the presentation from the Irish Taxation Institute last week. First, the Form 12. The impression given was that most PAYE taxpayers have to fill up a Form 12 in order to claim credits/reliefs or to request a balancing statement or make a repayment claim. This is absolutely not the case. Forms 12 are required only from higher income earners and people who claim the higher value and more complex tax reliefs. The vast majority of workers never see one. Last year less than 5% of all PAYE taxpayers complete a Form 12.
11. The second form I would like to refer to is the medical expenses claim form Med1/Med2. Yes, the Med 1 is a four page form, but two of those pages consist of explanatory material, and the first page simply asks very basic name/address etc. information. So the form insofar as it relates to the claimant’s medical expenses is essentially a relatively simple one-pager. As regards the Med 2 (which is completed by a dentist for qualifying dental expenses) there is no longer any requirement to send this into Revenue; it is sufficient to keep it (along with other medical expenses receipts) in case a claim is spot-checked by Revenue. Stocks of Med 2 forms are always kept by dentists and are completed by them. The branding of the Form 12 and these Med forms last week as real barriers to people claiming reliefs has bemused us in Revenue. And Chairman while I am referring to matters inferred to the Committee last week can I also mention the matter of “swift” repayments. Again contrary to the impression given, all repayments are prioritised and are very swiftly repaid – directly into people’s bank accounts if they so wish.
Relief at Source
12. Members of the Committee will be aware that from 2001, we moved to a system of tax relief-at-source (TRS) for certain reliefs such as mortgage interest and medical insurance premiums. This was facilitated by the relatively small number of “intermediaries” involved.
Budget announcement
13. As announced in the Budget, starting in 2007 credit institutions will be allowed to operate DIRT-free accounts for the over 65’s and incapacitated persons; and all age-related credits and credit for trade union subscriptions will be given as far as possible automatically. We are also making arrangements so that the non reimbursed amounts paid on prescribed drugs under the drugs refund scheme can be automatically refunded at the person’s marginal rate of tax. And for 2008, the plan is to move to giving automatic repayments in respect of certain hospital and other medical expenses. Other automatic relief options (such as in respect of nursing home payments) are also being explored.
Overall Approach
14. In summary then Chairman, the hallmarks of our service to PAYE taxpayers are;
- There is no need for claim forms for most credits; any suggestion of “one claim, one form” (the Irish Taxation Institute’s proposal) would in fact be a backward step and out of tune with Revenue’s more modern thinking.
- Our philosophy regarding credits is (wherever possible) “claim once, keep forever”. This works well for standard credits with fixed amounts, where a person’s circumstances are unlikely to change from year to year. Any suitable credit, once allowed, is generally carried forward from year to year by the Revenue computer system.
- We operate a self-assessment ethic – we assume people are honest and allow them to claim their due. A small proportion of claims are checked.
- Relatively few PAYE income tax returns (Forms 12) are issued or required. 95% of workers never need to complete one.
- Where we do require a form to back-up a claim, we generally “prompt” the claimant to complete the form every year. For example, anyone who claimed medical expenses relief in excess of €1,000, will get a claim form in the post every year. The same thing happens where an elderly person claims DIRT exemption.
- As already mentioned, claims for refunds are prioritised as indeed are requests to get people off emergency tax.
Public Information and Campaigns
15. Chairman this meeting is also focused on what Revenue does to make people aware of their entitlements and to encourage claims. Well, of course, the starting point is that every year each one of the 2.2 million PAYE taxpayers gets a tax credit certificate showing the credits that they have been given (2.5 million are issued because a substantial number of taxpayers have more than one employment). They also get a short leaflet explaining all the standard credits that are available. It is quite simple to check the credits given against those available and taxpayers are encouraged to do this. This is a chance for people to let us know if there’s something they feel they are entitled to but that we don’t know about. Credit Certificates for 2007 will be in the post in the next few weeks and, as usual, we will have advertisements in the papers and on radio telling people about this.
16. From time to time we have public information campaigns; in 2006 the Revenue Chairman wrote to every person on the PAYE tax record telling them about the new ROS and other self-service options for employees. During August and September we launched a nationwide campaign to encourage take-up of health-type reliefs, the bin charge credit and rent relief. The response to this campaign was encouraging. We will be running something similar again this year.
17. A wide range of publicity booklets can be found in our public offices and on our website. Leaflets and claim forms for medical and dental expenses are available in clinics, surgeries and pharmacies. More limited information is on teletext. Increasingly, the booklets and leaflets are becoming available in other languages or contain directions to where there are web-versions of the text in other languages. The ROS letter issued by our Chairman, contained pointers to web-based information in Polish, Lithuanian and two dialects of Chinese. Revenue already employs Polish people and we are looking to recruit some Chinese staff.
18. Wherever it makes sense, we work through trade fairs, representative bodies and employers to get the message through. More than 500 employers were visited countrywide in 2006 to meet with Payroll staff and employees who wished to discuss their tax issues. Over 4,000 people for example visited the Revenue stand at the National Ploughing Championships in September last year. Also in 2006, Revenue staff participated at Jobs Ireland FAS Workshops for people contemplating working in Ireland.
Concluding Remarks
19. Despite our efforts, some people just don’t claim what’s due to them. There can be many reasons for this. Human inertia means many won’t bother to claim amounts that, some, by today’s standards, regard as small. Some people are not comfortable with anything to do with numbers and some people do prefer to stay away from officialdom (including Revenue). Taxpayers should be assured that if they look for what’s due to them, we would allow their claims without fuss. That is what our presumption of honesty means. There is a small chance that we will look for some evidence to back up a claim. But there is no prospect of us launching a major investigation into an ordinary PAYE worker who claims the standard reliefs due to him or her.
20. Chairman, Revenue faces many challenges these days in all areas of our work. There is a general recognition of our successes on the compliance front and indeed Deputies on all sides have been complimentary about this. From time to time it is inferred that we don’t have the same enthusiasm on the service side. Not so. I assure the Committee that we bring the same energy, the same innovation and the same commitment to customer service. Our service is modern and improving all the time. Our objective now, as in the past, is to encourage people to claim and help them to claim what’s due to them. We naturally want to encourage people to use our on-line and other self-service channels as much as possible - but we fully recognise that some people are still more comfortable talking to us either on the phone or in person and for as long as they wish to engage with us this way we will provide them with the personal service and courtesy they are entitled to.