Maura Conneely

Customer Service Policy Unit

Office of the Revenue Commissioners

Ardilaun House

St Stephen's Green

Dublin 2

29 May 2008 Dear Maura

We refer to Revenue's invitation for submissions on its consultation document on mandatory e-filing.

The CCAB-I's opinion is that the introduction of mandatory e-filing and e-payments is not supportive of the need for flexibility towards Revenue's customers -the taxpayer and their tax agent.

Without prejudice to our view that mandatory e-filing and e-payment is inappropriate and premature, there are practical operating issues which we believe that Revenue must consider before enforcing mandatory use of Revenue on Line Service.

Mandatory e-filing and e-payment will in the majority of cases push the responsibility for dealing with sensitive and confidential information such as a client's bank account details onto the tax agent. In addition, the tax agent will also be obliged to take responsibility for transactions of potentially large sums of money on behalf of the client.

1. Improved Facilities to Amend Innocent Error

In the context of the additional responsibility mandatory e-filing and e-payment will impose on the professional tax agent, Revenue must provide a facility on the agent's ROS webpage or a dedicated ROS officer to reverse payments and make corrections to payments and direct debit instructions. Such a facility should be as flexible as possible to allow the agent to make emergency amendments with minimum embarrassment in front of the client. The following are the most common examples of innocent error on payment transactions which should be subject to easy correction by the agent:

There could be a change to the client's direct debit details on the due date which results in a tax payment being debited from two bank accounts. We are aware that Revenue will currently facilitate the amendment of direct debit details if such an amendment is requested before the due date but no such facility exists if the error is discovered on the actual due date.

An overpayment of tax may be put through on ROS in error. Again Revenue currently facilitates the amendment of such an overpayment if requested in advance of the payment date but no such facility is in place if the error is discovered on the payment due date or after the payment due date. Revenue has arranged repayment in some cases but this involves a very complicated process of reversing the debit instruction with the client's bank and is dependent on locating the Revenue officer with authority to allow such a reversal.

The breakdown of the ROS system in the middle of a transaction has also resulted in instances of payment error i.e. agent may put through the payment twice or may not successfully put through the payment at all. As such breakdowns tend to arise on the deadline date, there is currently no facility to easily rectify such payments errors or avoid the imposition of interest on late payments.

2. Compliance Costs

Revenue has stated that the minimisation of compliance costs for the taxpayer is a core reason for introducing mandatory e-filing and e-payments. However, we believe that mandatory e-filing/e-payments will increase compliance costs for the taxpayer for the following reasons:

1. In general, preparation of tax returns and cheque payments for submission to Revenue is carried out by junior compliance staff. However, the responsibility mandatory e-filing/e-payment will impose on tax agents in terms of handling client bank account details and electronic payments, will require senior staff input at submission stage and this will ultimately push up the client's compliance costs.
2. Professional indemnity insurance will increase due to added risks arising to agents on the imposed additional responsibilities.
3. Professional bodies such as the ICAI, ACCA, CPA and CIMA have specific ethical standards which prohibit our members from handling client funds except where investment accreditation is in place. Many agents could be compromised because mandatory filing will increase the instances of key clients requesting their agent to use its firm's bank details to facilitate the payment of tax liabilities.
4. Revenue will have to offer further control procedures and assurances to safeguard the agent from fraud issues i.e. internal fraud or outside hackers into the system resulting in the theft of bank details of clients.
5. The risk involved in arranging direct debit payments from client bank accounts and handling confidential information on behalf of clients will be too great for a lot of our members. If mandatory e-payments are implemented then accountants will be forced into a position of offering an incomplete service to clients as they can not assume the responsibility for arranging the e-payments. Tax compliance is an expertise and if the taxpayer is forced into managing this expertise then greater support and assistance will be required from Revenue which defeats all of the perceived for efficiencies underlying mandatory e-filing and e-payment.

3. Quality of ROS Service and Output

The overwhelming feedback from our members is that the quality of ROS has deteriorated in recent years. Output from ROS has not improved since its introduction in 2001. The ROS generated Form 11 and CT1are difficult for taxpayers to understand. Improvements made by Revenue to ROS are focused on improving the system for internal processing with no real advances in the system for the direct benefit of the tax practitioner or taxpayer. In addition, there is a distinct lack of ROS support combining expertise of a tax technical nature and IT problems. A lot of the busy practitioner's time is wasted by having queries passed around on the phone from ROS technical help desk to ROS payment support to the ROS liaison officer. The query often requires expertise from all three helpdesks and it is unhelpful that such a division of labour operates within ROS support.

If Revenue is serious about implementing e-filing and e-payments as a service offering then the turnaround time for updating ROS returns must be radically improved. For example a number of our members wanted to file a January 2008 CT1 on line in April however the earliest date a CT1 for 2008 will be available is June, six months into the tax year. The delay in updating the online CT1 is unacceptable and will give rise to serious problems for taxpayers if such an inadequacy persists under mandatory e-filing.

The 2007 ROS generated Form 11 does not have a declaration section. The declaration previously followed the format of the paper return. This is a very important section to the Tax Return as it formally outlines that the Return is the legal responsibility of the taxpayer and that he/she is formally confirming that the information in the return is correct and complete. The omission of the declaration on the 2007 Tax Returns has very serious implications for the tax agent as now the agent will have the added responsibility of ensuring that the client is aware of his/her legal responsibility in relation to the tax return. This will mean additional paper work for drafting and signing in order to apply good procedure. More importantly, the Revenue is failing in its responsibility to properly inform the taxpayer of the legal implications of a ROS tax return.

4. Consultation with Practitioners

Our final point on this submission addresses the goodwill tax agents have contributed towards ROS over the years. It is fair to say that that ROS has been supported by the tax profession since its introduction and agents have worked patiently with Revenue towards ROS's constant improvement on the understanding that e-filing and e-payments would remain a flexible tool for tax agents and taxpayers. It is unhelpful at this stage in the life cycle of ROS to introduce a mandatory e-filing / e-payment component which is not appropriate to all taxpayers or tax agents.

As a representative body, CCAB-I has members in all practices across Ireland. Following discussions with our extensive membership, we have no evidence that Revenue has adequately consulted with practitioners on the question of mandatory e-filing or e-payments.

We trust that you will consider the issues raised in this submission and we look forward to your response to our concerns.

If you have any queries, please do not hesitate to contact either myself or my colleague Norah Collender.

Yours sincerely

Brian Keegan

Director of Taxation

Institute of Chartered Accountants in Ireland