Irish Taxation Institute Welcomes Payments Support Service

by Robert Lee, Tax-News.com, London

26 February 2009

The Irish Taxation Institute (ITI) has welcomed the introduction by the Revenue Commissioners of a tax payments support service for businesses which are experiencing severe cash flow difficulties.

In its statement, ITI highlighted the need to put a clear, well-publicised and transparent one-stop service in place for businesses, a large number of which are facing severe cash-flow problems. ITI pointed out that this need is particularly felt by the SME sector, a sector that many regard as the engine room and the future of the Irish economy.

”The one-stop service must be free of red-tape and swift so that businesses know what must be done in order to get a same day assessment of their situation, coupled with a realistic tax payment plan,” urge ITI, adding: “Fresh thinking is needed to design a service that meets the commercial realities of today's economic crisis.”

ITI also believes that the rate of interest charged on late payment and instalment payment of tax is unacceptably high. "Depending on the tax, annualised interest of 10% to 12% is applied and these rates have not been adjusted in four years" said Jim Ryan, President of the Irish Taxation Institute. "The equivalent interest rates in the UK are 2% to 4.5% and the UK rates are constantly reviewed in line with the prevailing commercial rates. Our rates are unsustainable in the current economic crisis and could quickly cripple small businesses. While we appreciate that this would require a change to the legislation, we believe the rates should be aligned with commercial rates as a matter of urgency."

In addition Jim Ryan said "For some SMEs, it's not that they can't pay their tax liabilities, it's that they can't pay right now. A tax payments support service will provide scope to vary payment schedules on a case by case basis taking into account the financial viability of the business in question. This must be coupled with pragmatism in the application of interest and penalties. In the long term, it is in the exchequer's interest to adopt a flexible approach to viable businesses rather than forcing their early closure because they can't meet tax deadlines in the current environment. We must support these businesses at this time, enabling them to maintain employment and future tax payments."

"It would be extremely helpful if such a service could also be used to accelerate the repayment of tax refunds. Those cash-starved businesses currently waiting on tax refunds would greatly welcome such a ‘fast-track system’.”

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