Revenue publishes 2019 Annual Report
Today (25/06/2020), Revenue has announced the publication of its Annual Report for 2019.
The COVID-19 pandemic has had a major impact on the Irish economic landscape, and the current business environment is in stark contrast to that which prevailed during 2019. While the main focus of the Annual Report is on Revenue’s key achievements and performance for last year, it also provides an overview of the challenges that have dominated the first half of 2020.
Alongside the 2019 Annual Report, Revenue has also published a number of other reports today, including:
Commenting on today’s publications Revenue Chairman, Niall Cody, said it is against the backdrop of exceptional circumstances arising from the COVID-19 pandemic that Revenue publishes its 2019 Annual Report. He noted that:
“The pandemic has presented and continues to present significant challenges for the economy, businesses and workers, as well as impacting key elements of Revenue’s role as a tax and customs administration. Revenue’s priority during the ongoing crisis is to protect the health of our staff and their families, to continue providing essential Revenue services and to play our part in supporting the delivery of other critical public services to combat the pandemic and mitigate damage to the national economy. As an organisation, we have adapted well to ensure the continued delivery of our critical business functions and the implementation of new initiatives, while working in new ways.”
Temporary Wage Subsidy Scheme
On 24 March 2020, the Government announced a range of measures to provide financial support to businesses and workers affected by the COVID-19 crisis. As part of these measures Revenue administers the Temporary Wage Subsidy Scheme (TWSS).
In relation to the TWSS Mr. Cody said
“Our investment in real-time payroll reporting (PAYE Modernisation) meant that, in a very short timeframe and building on data returned to Revenue through real-time payroll reporting, we re-engineered our PAYE business processing system from one primarily focused on securing the right tax at the right time to one that also enables the delivery, in real time, of critical financial support to employers and employees.”
Mr. Cody also added that
“Revenue’s priority in administering the TWSS was to ensure that eligible employers who had experienced significant negative economic disruption as a result of COVID-19 could register for and start to receive payment as quickly as possible.”
As at 25 June 2020, over 62,800 employers had registered for the TWSS with an estimated 405,000 employees being supported by the scheme having received a subsidy in their most recent pay period. The cumulative value of payments made to employers under the scheme is almost €1.7 billion.
Earlier this month, the Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, announced the extension of the TWSS. As such, Revenue will continue to administer the scheme until 31 August 2020,reimbursing employers for subsidy amounts paid to eligible employees, notified to Revenue via the payroll process. However, where a business starts to recover from the impacts of the pandemic and the employee’s pay increases, TWSS payments will be subject to tiering and tapering.
Mr. Cody also confirmed that,
“this week, we have started contacting employers who have received subsidy payments under TWSS to confirm that the scheme is operating correctly. This programme will last for several months and Revenue expects that it will provide the assurance that the vast majority of employers are fully compliant in their operation of the TWSS including that subsidy payments have been fully passed on to employees.”
Cashflow Support and Debt Warehousing
Commenting on Revenue’s support for businesses during the COVID-19 crisis, Mr. Cody said that
“we have taken a range of actions to assist businesses experiencing cashflow and trading difficulties, including suspending all debt collection and the charging of interest on late payment for the VAT periods covering the first six months of 2020 and the February, March, April, May and June PAYE (Employer) liabilities. These deferred payments, which amount to €1.5 billion up to the end of May, have been a vital liquidity support to both SMEs (given automatically) and larger businesses (on request) that are severely impacted by COVID-19.”
Under the debt warehouse arrangement, which was announced by the Government on 2 May 2020, the VAT and PAYE (Employer) liabilities deferred while a business is unable to trade or is subject to restricted trading due to the COVID-19 related health restrictions, as well as liabilities for an additional two months after the business resumes ‘normal’ trading, can be warehoused for a period of 12 months. During that period, no interest will arise on the unpaid debt and at the end of the warehoused 12-month period, a reduced interest rate of 3% will apply on the debt until paid, which can be over an extended period as agreed with Revenue. This compares to a rate of 10% per annum currently charged on overdue VAT and PAYE (Employer) tax debts.
Mr. Cody confirmed that for businesses who wish to avail of the debt warehouse arrangement
“the tax debt will have to be quantified through the filing of all relevant returns for the restricted trading phase, as well as any other returns that may be outstanding in respect of other taxes. If a best estimate return of liability has been made for any period, the correct return will have to be filed to ensure the benefits from the debt warehouse arrangement.”
Mr. Cody also confirmed that Revenue is operating the debt warehouse arrangement on an administrative basis until the necessary legislation is enacted.
In 2019, Revenue collected total gross receipts of €84.2 billion including almost €16 billion in non-Exchequer Receipts collected on behalf of other Government Departments and Agencies. Net Exchequer receipts of €58.3 billion were up by 6.7% or €3.7 billion on 2018, with the largest tax receipts arising from Income Tax (39% or €22.9 billion), VAT (26% or €15.1 billion) and Corporation Tax (19% or €10.9 billion).
Strong levels of timely, voluntary compliance were evident across all tax heads. Timely compliance rates in 2019 were over 98% for large and medium cases and 91% for all other cases. The Local Property Tax compliance rate was 97%.
In 2019, key features of Revenue’s performance included:
- The modernisation of the PAYE system, and particularly the receipt of real-time payroll information which has enabled the collection of the right tax at the right time and the provision of extended online services to PAYE taxpayers in myAccount.
- The launch of the Debt Management Services application which provides a streamlined, flexible service to support viable businesses with tax payment difficulties.
- Continued extensive and detailed Brexit preparedness and contingency planning, actively engaging across all relevant Government Departments and Agencies, and with more than 100,000 businesses.
- Completing over 566,000 compliance interventions, yielding €548 million in tax interest and penalties.
- Settling 127 tax avoidance cases with a yield of €129 million in tax, interest and penalties.
- Continued action against fiscal fraud and smuggling evidenced by the seizure of illegal drugs valued at over €23.5 million and illicit tobacco products valued at over €10.6 million.
Throughout 2019, Revenue also further evolved its structures to optimise the alignment of resources with risk and delivery of high-quality service to support voluntary compliance.
Looking towards the future, Mr. Cody said that the collection of taxes and duties remains Revenue’s primary function. He noted that
“our Statement of Strategy 2020 – 2022 provides a clear focus and framework for determining and addressing our goals and priorities for the next three years, even against the backdrop of significantly changed and challenging economic and business environments.
Revenue will continue to work closely with the Minister for Finance and his Department in the development and implementation of measures that support businesses to resume trading, ensure the collection of the taxes and duties due to the State and assist in the overall national recovery.”
In relation to the UK’s departure from the EU, Mr. Cody stressed that
“Revenue continues to be strongly focused on supporting and helping businesses to be ready for the significant changes and impacts of the UK’s exit from the EU which will take full effect in just six months time. Businesses really need to make sure that they use the short time still available before the end of the year to be ready for the change”.
In closing, Mr. Cody, on behalf of the Revenue Board, thanked Revenue’s staff for their professionalism and dedication, especially at this time of unprecedented challenge.
"Revenue’s continued success in delivering on our mission and the part we will play in supporting the delivery of critical public services to combat the pandemic and mitigate damage to the national economy is down to the determination and dedication of our people, their ability to adapt quickly and the flexibility of our systems.”