Aggressive tax collection
Speaking at the ICAI Annual Conference, Director of Taxation Brian Keegan, said that Revenue heavy handedness was counterproductive to the promotion of tax compliance.
“Revenue have the power in many areas to seek interest, penalties and double recovery of tax in situations where there is no loss of revenue to the Exchequer. This year's Finance Act has increased more than five-fold many of the VAT penalties which Revenue can apply. It is necessary to have a robust penalty regime to deal with tax default, and tax compliance in Ireland is at a very high level compared to many other Western economies. But the danger now is that tax penalties can be so disproportionate as to discourage taxpayers who have made mistakes from putting matters right”.
In particular Mr Keegan highlighted the penalty regimes being applied to the Construction Industry and to owner directors of small and medium sized businesses. “The sanctions which apply to these industry sectors don't take account of tax already paid over. By and large, Revenue do a good policing job. But they must bear in mind that excessive application of the penalties regime, particularly where taxpayers are largely compliant or where the error is administrative in nature, is actually counterproductive to the compliance culture”.