Press Conference: Revenue Commissioners' Annual Report 2018
Introductory comments by Commissioner Niall Cody, Chairman
On behalf of the Board, I am pleased to present our Annual Report for 2018. This is Revenue’s 96th Annual Report, and the second progress report on our Statement of Strategy for the period 2017-2019. Our Statement of Strategy has two key strategic pillars, to provide service to support compliance, and to confront non-compliance.
This morning, I will give you an overview of 2018 results, which reflect the significant progress towards our key objectives and goals. I will also talk about some of our plans for 2019 and into the future.
Against a backdrop of continued strong growth in the economy, Revenue collected total gross Exchequer receipts of €77.27 billion in 2018, including €14.1 billion in non-Exchequer receipts collected on behalf of other Government Departments and Agencies.
Net Exchequer receipts for 2018 were €54.6 billion, an increase of €4.04 billion when compared to 2017. There were increased receipts for almost all taxes and duties including Income Tax, up 6.6%, VAT up 7% and Corporation Tax up 26.7%.
Along with today’s Annual Report, we are publishing two Revenue research reports on Corporation Tax and VAT. These reports make key contributions to policy discussions, providing quality statistical and economic analysis on two of the largest taxes. The report on Corporation Tax is particularly timely given the €2.2 billion increase in receipts in 2018, showing the main drivers of this are higher receipts from companies in the manufacturing sector and increased payments from large, multinational companies operating in Ireland. The 10 largest companies accounted for 45% of Corporation Tax receipts in 2018. Additionally, the analysis highlights the most recent tax returns data, including the levels of profits, of losses carried forward, a decrease in the cost of the R&D credit and the 2 million jobs supported by companies.
We are also publishing summaries of the 2018 National Random Sampling Programme for marked mineral oil products, and the results of the Tobacco Products Research Survey 2018. These report on the scale of the selling and use of laundered fuel in the State and provide an estimate of the volume of non-Irish duty paid cigarettes being consumed in Ireland. Results of both demonstrate the effectiveness of Revenue’s programmes and strategies to tackle non-compliance in these areas. Following a recommendation of the Comptroller & Auditor General to further increase transparency, we are also publishing a report on the methodology of the tobacco survey. Additionally, in 2018, we conducted our first survey of taxpayers with self-employed income below €10,000. The results of the survey provide key insights into how we can further simplify the tax system for this cohort of customers, making it easier to be voluntarily compliant in the most cost-effective way possible.
Revenue plays a vital role in the economy by collecting taxes and duties due to the State. Continued strong levels of timely, voluntary compliance by taxpayers confirm that the vast majority of individuals and businesses pay the right amount of tax, on time. This is evidenced in 2018 by voluntary compliance rates of over 90% across all taxes. We acknowledge taxpayers’ engagement, and that of tax practitioners and agents, in achieving the very strong compliance rates we have seen again for 2018.
The level of tax debt available for collection was €1,032 million, up €74 million on 2017. We continue to focus on minimising the level of debt to the Exchequer through optimising development of technology and skills. During 2018, we completed extensive work on the development of our new Debt Management Service, which provides easy to use phased payment facilities for taxpayers who want to work with us to resolve their payment difficulties. At the end of 2018, over 9,000 businesses and individuals had phased payment arrangements in place, covering €93 million in debt. The new DMS system also provides for advanced profiling of cases, delivering significant increased capacity for compliance and enforcement activities. For the minority of taxpayers who either refuse to work with us, or refuse to pay their tax, we undertake a range of debt collection and enforcement actions to collect tax debt. In 2018, we collected €211.6 million in 31,680 debt enforcement cases.
Service to Support Compliance
Our report today provides details of our continued support for taxpayers, enabling voluntary compliance by providing service in a timely, cost effective way. We continue to pro-actively engage with the various different segments of our taxpayer base to help them meet their obligations, receive their due entitlements and only pay the correct amount of tax.
Last year, we responded to 1.4 million items of written correspondence, processed 1.6 million customs declarations and answered more than 2.2 million telephone calls from taxpayers. In September 2018, we launched our National PAYE Helpline, a single contact point for employees and pension recipients. We also launched new telephone technology, providing a national number for all telephone contacts, which significantly reduces costs for taxpayers who contact us.
Our commitment to improve our self-service facilities minimises the burden on compliant taxpayers. At the end of 2018, 2.3 million individual taxpayers were registered for myAccount.
Using our online services continues to be the quickest, easiest and most convenient way for taxpayers to manage their affairs. Today, I am also announcing an extension of the Pay and File deadline for self-assessed taxpayers, who both pay and file online, to 12 November 2019.
The new arrangements for PAYE reporting came into operation on 1 January 2019, representing the most significant reform of the administration of the PAYE system since its introduction in 1960. The changes mean that every time employers pay their employees, they report the pay and statutory deduction details to Revenue as part of the payroll process.
Our co-design approach for the new system saw us engage extensively with employers, payroll professionals, tax practitioners, accountancy bodies, business representative organisations and payroll software developers. As a result, real-time PAYE reporting is seamlessly integrated into the payroll system, bringing significant streamlining of business processes and a reduction in administrative burden and costs. We are grateful for the co-operation of the various stakeholders in helping us deliver PAYE Modernisation. Their input was central to the success of the project.
All of our collaborative and varied approaches helped ensure the smooth transition to the new reporting requirements for employers. As of 31 March 2019, we had received 1.4 million payroll submissions (pay and statutory deductions) from almost 157,000 employers, reporting total gross salaries of almost €24 billion, for more than 2.6 million employees and pension recipients.
The next phase of PAYE Modernisation will focus on employees. From next Wednesday 15 May, we will make relevant payroll details available to each employee in myAccount, so that they can view in real-time, by pay date, what pay, tax, USC and PRSI details are being submitted on their behalf by their employer or pension provider.
Now that we have access to real-time payroll details as they are being submitted by employers, we can make the PAYE system more flexible and responsive to the needs of employees and pension recipients by allowing for in-year reconciliations of a person’s tax affairs. This will ensure that, as far as possible, people pay the right amount of tax at the right time over the course of the year.
Further developments down the line, which are enabled by the receipt of real-time data, include a tax calculator for employees to see the impact of changes in their tax credits and an enhanced self-service facility to allocate tax credits across different employments.
We will also provide secure access for specified third parties to an individual’s pay and tax details, with the employee’s permission. This is an alternative to an income statement which is currently required by lending Institutions and other agencies.
In preparation for, and to address the implications of, the United Kingdom leaving the European Union, extensive and detailed Brexit preparedness and contingency work, for all scenarios including ‘no-deal’, was taken forward across all Government Departments and Agencies. As part of this preparedness, we actively engaged in the inter-Departmental work that was co-ordinated by the Department of An Taoiseach and the Department of Foreign Affairs and Trade and we worked closely with the Department of Finance, who determine fiscal policy.
Our preparedness and contingency planning for Brexit, at both national and European level, is undertaken in the context of our role and responsibilities. Our overarching priority and objective is to facilitate the efficient and timely movement of legitimate trade.
Our 2018 Annual Report outlines our close engagement with businesses on the steps they should take to prepare for Brexit. We developed a comprehensive Trader Engagement Programme, providing practical advice and guidance to Irish businesses on the impacts Brexit may have and assisting them in identifying steps to take to prepare accordingly.)
Having an Economic Operators' Registration Identification (EORI) number is the minimum requirement for businesses that wish to trade with, or through, the UK when they leave the EU. However, despite a 110% increase in EORI numbers in 2019, when compared to the entire of 2018, there are still a significant proportion of businesses that Revenue has identified as trading with the UK who have not registered for EORI. I would like to take this opportunity today to remind businesses that if they do not have a customs (EORI) registration, they are running a real and unnecessary risk that their business will experience significant delays and problems moving goods post Brexit. Applying for an (EORI) number is free and can be completed quickly and easily through Revenue’s secure online services.
During 2018, we processed 1.6 million import and export custom declarations through our electronic systems. Post Brexit, import and export declarations could increase to as many as 20 million per annum. We carried out significant work to increase our systems capacity to cater for trade with the UK as a third country. We are confident that our systems will successfully handle the increased transaction levels arising as a result of Brexit.
The vast majority of taxpayers are voluntarily compliant, meet their filing and payment obligations on time, and submit accurate returns and declarations. We support this strong culture of voluntary compliance by confronting non-compliance in all its forms.
Our comprehensive, risk-based compliance framework is embedded into our normal business. We dedicate significant resources to identify, confront and prevent non-compliance, deploying these resources on a risk priority basis. Our aim is to respond to risk and non-compliant behaviour in a timely, consistent, proportionate and effective manner.
In 2018 we conducted over 580,000 compliance interventions, ranging from routine assurance checks to audits and investigations. The total yield for the Exchequer from these interventions was €572.1 million in tax interest and penalties. We published 265 tax defaulters in the Quarterly List of Tax Defaulters, in respect of settlements of almost €44 million.
We seized over 1,500 vehicles for various offences as well as over 110,000 litres of illicit fuel. Arising from operations conducted throughout the State, we made over 7,000 seizures of illegal drugs valued over €33 million and illicit tobacco products valued at over €42 million. This includes the detection and closure of the first ever illegal cigarette factory in the State. Over 23 million cigarettes and a further 71 tonnes of tobacco were discovered on site. The finished product, and potential product, had an estimated street value of €49.6 million, representing a loss to the Exchequer of over €39 million.
Revenue prosecutions resulted in Court fines totalling €1.76 million in 695 summary conviction cases, and 21 criminal convictions for serious tax and duty evasion.
Realigning our organisational structure is an ongoing process, influenced by a wide range of factors, both external and internal. In 2018, we realigned our organisational structure, moving from a regional structure to one that is based on a nationally segmented taxpayer base. Five new national Divisions were established around defined taxpayer segments. Every taxpayer is now managed, from both a service and compliance standpoint, by one of the new national based Divisions. The changes in our structure ensure that we optimise the alignment of our resources to risk and allow us to maximise the benefit of our geographic footprint across the country, providing opportunities for diversity of roles and responsibilities across the organisation.
At the end of 2018, there were 6,471 people working in Revenue, equating to 6,111 full time equivalents. Our effectiveness in supporting compliance and addressing non-compliance depends on the commitment, professionalism, skills and capability of our people. Against a backdrop of ongoing loss of experienced staff to retirement, advances in technology and emerging trends in how businesses operate we continually invest in our people to overcome these ever-evolving challenges. We do this by building and retaining internal capacity, talent and leadership while also attracting and recruiting talented people. During 2018, we appointed 638 staff from open recruitment, interdepartmental and Top-Level Management competitions. In September, a recruitment campaign for customs officers, run by the Public Appointment Service, attracted more than 3,000 applications. To date this year, we have appointed 512 new staff, bringing our full-time equivalent to 6,419.
We will continue to support taxpayers by giving them the appropriate information to be voluntarily compliant in the most cost-effective way possible. As I mentioned earlier, with real-time reporting now in place for employers, we have turned our focus to the benefits of this new system for employees. On 15 May, all employees will be able to view their payroll details as reported by their employer, through myAccount, with further additional enhanced services to follow as the year progresses.
In relation to the UK’s departure from the EU, Revenue is strongly focused on supporting and helping businesses to plan for and prepare for Brexit. We believe that notwithstanding the uncertainty around timelines, it is vital that businesses prepare now so that they minimise the disruption and challenges arising from Brexit.
We continue to be alert, and pro-actively respond, to the risks arising from the changes in economic and business environments both nationally and globally. We are committed to protecting Exchequer funds and supporting voluntary compliance by confronting non-compliance in all its forms. The non-compliance behaviour of the taxpayer will determine the nature and potential severity of the intervention we undertake. Those who engage in evasion can expect a robust response from us where we will seek to apply the full legal sanctions available that reflect the seriousness and unacceptability of tax and duty evasion.
Finally, I want to acknowledge that our continued success in delivering on our mission, upholding our values and realising our vision is down to the dedication, flexibility, adaptability and professionalism of our management team and all our staff. We thank them for their determination, commitment and strong work ethic which has enabled us to report on the performance and results outlined in this year’s report.
9 May 2019