Press Conference Revenue Commissioners Annual Report 2009
Introductory Comments by Josephine Feehily, Chairman
Welcome and introductions
This is Revenue's 87th Annual Report. It is the second time we've reported progress on our Statement of Strategy 2008 – 2010 which sets out four main goals covering compliance; service; our contribution to economic and social development and organisational capability.
Our main results for the year 2009 are being distributed to you - I won't bore you with a litany – but I would like to give you an overview of 2009, and say a few words about our priorities for this year.
The Economic environment and Tax Collection
The economic and financial enviornment in which Revenue and its customers operate has changed dramatically over the past two years. Two sets of numbers illustrate this fact. Net tax and duty receipts at €33.3 billion are nearly €8 billion less than 2008 and €14 billion less than 2007. Put like this it is a stark reminder if we needed one of the extent of the fiscal crisis affecting our country.
Another indicator of the unwelcome change is that the outstanding tax debt, which is a reasonable measure of the financial distress many businesses and individuals are experiencing, has increased in 2009, from €1.86 billion to €2.11 billion. The scale of the tax challenge arising from this is very significant.
Our collectible debt (i.e. uncontested) as a percentage of gross tax receipts at 2.8% remains low by international standards but even in these difficult times we are committed to doing everything in our power to keep compliance levels up and debt levels down.
Challenges for Business
We are well aware of the challenges facing taxpayers and businesses in managing cash flow and accessing credit. I have said many times that we want to help viable businesses and taxpayers who want to pay their taxes, but can’t in the short term. We will work with those people to arrive at the best approach to bringing matters to a satisfactory conclusion with the minimum of delay, provided they engage with us. As a practical illustration of this, can I tell you that as of end March instalment arrangements are in place in over 13,000 cases covering debts of €119 million and 1,100 cases covering debts of €76 million are being supported in other specific arrangements designed to deal with particular challenges of the current environment. Our support for viable businesses experiencing short-term difficulties is continuing this year where necessary.
Having said that, our focus remains firmly on securing timely compliance and payment of tax. We cannot and will not be a banker or a lender of last resort, and we must deliver our support to business in a way that ensures that we do not put compliant businesses at a competitive disadvantage.
Revenue needs taxpayers and businesses to meet their tax obligations on time, and taxpayers need Revenue to manage compliance so that their competitors do not get an unfair advantage. This is the essence of the balance we are trying to achieve.
A few numbers from our debt management programme will illustrate the scale of the businesses in difficulty:
- In 2009 we wrote off €221.5 million - 85% was in circumstances of insolvency or where a business simply ceased trading;
- 1147 companies were wound up in Creditors Voluntary Liquidations, more than double the 2008 number;
- The number of Receiverships grew to 192, compared to 47 in 2008;
- There were 91 interim Examinerships compared to 72 in 2008.
Audit and Assurance checks
During 2009, our auditors completed 12,419 audits with an overall yield of €602 million, up 5.7% on the 2008 yield. Over 361,000 assurance checks, a less resource intensive form of intervention, were carried out in 2009, an increase of almost 14,000 on the 2008 figure. The yield from assurance checks was just over €68 million.
We also began an investigation into trusts and offshore structures which at year-end yielded €17.6 million from 94 cases. We broadened the scope of our offshore enquiries last December by obtaining new High Court Orders against the four Irish clearing banks requiring them to provide details of money transfers over €5,000 to and from Switzerland, Liechtenstein, Isle of Man, Jersey and Guernsey. The Orders are comprehensive in nature: they cover the twelve years to December 2008 and include electronic transfers as well as cheques and drafts either drawn in the State and sent to the offshore jurisdiction, or drawn in the offshore jurisdiction and sent to the State. In the initial phase, we are focussing on transfers to and from the Isle of Man, Jersey and Guernsey and we expect to receive the first tranche of information under these Orders in June.
During 2008, because we were getting information about interest earned on deposits in financial institutions, we launched a voluntary disclosure initiative for persons holding untaxed funds amounting to €100,000 or more. At the end of 2009, 1,214 disclosures had been made and €76.3 million paid. The account information is now received annually and used for risk analysis.
The sources of information available to us are increasing all the time. New sources include deposit interest in Credit unions, 2nd home tax returns, information from the Taxi Regulator, and from insurance companies about vehicles not registered in Ireland. The strategy of using third party information to enhance our risk analysis and help us to target cases will continue in 2010.
Tobacco Smuggling
Tobacco smuggling is a significant risk, one we are working hard to mitigate, and in 2009 there was a substantial increase in the volume and value of smuggled cigarettes seized - 10,600 seizures, amounting to 218 million cigarettes, up 62% on the previous year. – and 165 convictions were secured for cigarette related offences.
The high point of the year was a multi-agency operation last October led by Revenue's Customs Service, where we made the largest seizure of cigarettes ever in the EU - over 120 million contraband cigarettes with retail value of about €50 million and potential revenue at risk of approximately €40 million. OLAF, the European Anti-Fraud Office was also involved and it is estimated that in excess of 150 officers from the various Agencies participated in the field during the operation.
Already this year we have had nearly 2,100 seizures made up of about 1200 kilos of tobacco and 64 million cigarettes……7.2 million in Dublin port this week alone
Our Customs Service also achieved some notable successes seizing drugs, criminal cash and offensive weapons during the year (details are in the Report).
We now have two Customs Cutters and two container scanners fully deployed and we are determined to keep a very sharp focus on tobacco smuggling this year.
Customer Service
We firmly believe in the importance of good service both as right for citizens and to support compliance and I think we do it well.
Rather than simply blow our own trumpet can I give you some external validation
- Ireland is the highest ranked EU Member State for ease of paying taxes, according to 'Paying Taxes 2010 – The Global Picture', a study published jointly by the World Bank and PricewaterhouseCoopers.
- In a survey of our SME customers 87% were either satisfied or very satisfied with Revenues service.
We are very proud of those results.
We listened to business and improved the response times for income and corporation tax repayments. On the personal tax side, we automatically issued over 56,000 refunds to the value of €9.6 million in relation to prescription drugs and over 1,500 refunds amounting to almost €760,000 in respect of tuition fees.
Online Services
Online delivery is now the default for Revenue's services and we pay a lot of attention to ensuring that they are fast, efficient, user-friendly and comprehensive. We also pay a lot of attention to ensuring that they are secure and I am very proud to report that Revenue is one of only 30 businesses in Ireland that has achieved the ISO standard for information security management – ISO 27001
By the end of 2009, almost 500,000 customers had registered for our PAYE Anytime service, up 55% on the previous year, and they carried out 670,000 transactions.
A new e-Stamping system was launched in December 2009 following extensive engagement with the Property Registration Authority and the Law Society. This been a great success, with a 90% take up rate.
Electronic filing and payment of certain taxes became mandatory in 2009 for Government Departments and large companies. This year, a broader range of businesses are covered, and increasingly, e-services will be mandatory for complex transactions. For example EU cross border VAT claims can now only be made electronically, and later this year complex Capital Acquisition Tax reliefs will have to be claimed on-line. We will also be launching a public consultation setting out our vision for the roll out of mandatory e-filing over the coming years.
Tax Treaty Network
Revenue has an important role to play in contributing to Ireland's economic development. While this role encompasses many different activities, I want to mention in particular that 2009 was a year of great achievement in extending and modernising our tax treaty network, which is crucial for inward and outward investment and trade. We now have signed comprehensive double tax treaties with 56 countries and negotiations have been concluded with a further 6, which are awaiting signature. Also during 2009 13 Tax Information Exchange Agreements (TIEAs) were signed.
We are active at relevant EU, OECD and World Customs Organisation fora, and combining a range of our activities, next week we are hosting a major WCO IT Conference in Dublin which will attract some 400 delegates from all over the world.
Conclusion
The most difficult internal issue for us in 2009 was undoubtedly the loss of over 500 colleagues in a single year. Nonetheless Revenue staff did great work across all our programmes, which we acknowledge and for which we say a heartfelt thanks. Compliance levels for large and medium businesses were maintained in a very difficult climate, we introduced 3 new taxes and several new tax treaties, we collected a significant amount of money, supported a lot of businesses, and seized a huge amount of smuggled tobacco. We opened some new offices, and acquired some very important new kit.
Staff losses are continuing in 2010 and consequently, continually organising and re-engineering our services to manage with less, and rebuilding capability by recruitment and training, are key priorities for 2010. Other priorities include:
- Making the best use of our resources by tackling the riskiest cases
- Paying a lot of attention to cash business, working closely with other agencies
- Keeping a very clear focus on tobacco smuggling
- Increasing take up of our e-services and enhancing our own use of electronic tools for risk selection, audit and compliance
- Introducing a mandatory disclosure regime for tax avoidance schemes.
Our overall priority in 2010 and beyond is to protect the tax base. We will do this by continuing to make it as easy as we can for businesses and taxpayers to comply; giving viable businesses who work with us a fair hearing if they get into temporary difficulties, and ensuring a level playing field by taking resolute action against those who don't comply.
Revenue as an organisation still has enormous capacity for innovation and hard work. These qualities, with the help and support of our staff, will enable us to achieve results on these priorities.