In 2010, the annual tax furore was about credit union interest reporting. Last year, January's tax debate was about whether or not a Finance Bill could be pushed through before the dissolution of the Dail. This year's tsunami of outrage was provoked by the issue of less than gentle reminders that pensioners are taxpayers too.

Many Chartered Accountants doubtless spent a good part of their weekend explaining to parents, clients, relatives and the parents and relatives of friends the practical consequences of the 115,000 or so letters which issued to Social Welfare recipients early this year. We can make the following points:

• There is no specific targeting taking place – the letter issued because Revenue were provided with Department of Social Protection records.
• Contrary to much of the Press reporting, the additional liability arising from previously untaxed Social Protection payments will be very small for the vast majority of people affected. We understand that the taxpayers who will be hit for tax at the marginal rate of 41% on the full amount of their Department of Social Protection pensions number in the hundreds rather than the thousands.

While Revenue made much of issuing the notifications in January so that any reduction in the 2012 personal tax credit can be spread evenly throughout the year, they are being less categoric about looking at prior years. It's understandable that Revenue do not want to paint themselves into a corner by offering assurances that they will not pursue pensioners for back duty. There are plenty of wealthy pension recipients, some of whose affairs are already in the public domain, whom Revenue will not want to preclude pursuing at some stage.

As against that, it's fair to say that majority of pensioners would not be routinely making returns of income, nor would be required to do so. In practice, it is almost impossible for Revenue to secure taxes back over a couple of years unless a return of income was technically due, or had been provided but was incorrectly completed. From past experience, it is unlikely that Revenue will divert significant resources for relatively small amounts of money. This is not tantamount to an amnesty nor, as was suggested in the Press over the weekend, would special legislation be required to “forgive” the kind of amounts involved. Revenue's powers under the Care and Management provisions of successive Finance Acts and the Taxes Consolidation Act give them ample scope to decide which cases to pursue or not pursue.

The level of political involvement and interest in the issues could result in the first live ammunition test of recent legislation governing the scope of the power of the Revenue Commissioners. The Ministers and Secretaries (Amendment) Act 2011 included a provision to place on a statutory basis the independence of Revenue when performing their functions.

Some commentary has been placed on the Revenue website-http://www.revenue.ie/en/personal/dsp-pensions.html