John McGuinness (Carlow-Kilkenny, Fianna Fail) | Oireachtas source

Before calling on the first speaker, Deputy Connaughton, I will respond to correspondence that the committee received on Dublin Waterworld and the incorrect charging of VAT on the issue of the National Aquatic Centre. I want to put on public record this statement in respect of the issue of the VAT charges on the lease of the National Aquatic Centre which was the subject of a committee report in May 2012 following on from two hearings of the committee in November 2011 and February 2012.

While the report of the committee to which the Minister for Public Expenditure and Reform, Deputy Howlin, has replied would normally mark the end of our consideration of an issue, the fact is that we have received ongoing and extensive correspondence which raises further concerns about how this issue arose and why this issue was pursued through the courts by the State.

The conclusion we drew in our report was that this VAT case should never have been taken or prolonged by either Campus and Stadium Ireland Development Limited, CSID, or its successor, the National Sports Campus Development Authority, NSCDA. Every piece of evidence that has been supplied to us since our hearings and the publication of our reports lends more weight to that conclusion.

I will not reopen this issue in detail today. I understand and accept that VAT law is complex but the line taken before the committee by the Department and by CSID, later NSCDA, that it relied on Revenue guidelines to try to levy the VAT charges on the lease of the National Aquatic Centre, does not stack up. This is because the evidence recently supplied to the committee shows that the professional adviser of CSID, PricewaterhouseCoopers, was not relying on Revenue guidelines but had correctly interpreted the VAT legislation in late 2002 and realised that VAT could not be charged. However, as the 2001 Revenue guidelines had not been updated to take account of the 2002 legislative developments, these guidelines were a better fit. The VAT charge was raised and the case was pursued based on a loose interpretation of these guidelines.

The correspondence clearly shows that withholding the valuation report from Dublin Waterworld and its professional advisers was a central plank to this strategy. The fact is that the policy adopted by CSID and NSCDA was fundamentally flawed and those who had an obligation to protect the interest of the taxpayer failed in their duty.

It is regrettable that the committee was not provided with the 2002 PwC advice from the outset. This was less than acceptable and a material omission by the Department and the NSCDA in their appearance before the committee. I note that this information only came to light following the intervention of the Information Commissioner.

The entire episode is not the way a State company or statutory authority should do its business. Moreover, as these agents of the State hired and paid with taxpayers' money a multi-million euro team of professional advisers, the correct and common-sense advice from both the Comptroller and Auditor General and the Office of the Attorney General was provided for free but was ignored.

The committee met yesterday to consider the issue. While we will not at this time reopen the issue, we will, first, write to the Office of the Attorney General asking that the latest list of documentation be considered by it in the review of the judgments as contained in Recommendation 6 of the committee's report and whether there is an onus on a State company, statutory authority or body to show its full hand, specifically advice that might call into question its position to the Revenue Commissioners, its overseeing Department, the Office of the Comptroller and Auditor General and the Office of the Attorney General, when, as in this case, these parties become directly involved and have a direct interest in protecting the position of the taxpayer.

Second, we will write to the Revenue Commissioners in view of the fact that in 2002, CSID and its professional adviser were fully aware that Revenue guidelines were not a perfect fit with the VAT regulations so that this latest correspondence and this statement can be incorporated in the formal review that arises from the acceptance of Recommendation 8 of the committee. We will also ask the Revenue Commissioners, in light of the doubts that existed about its guidelines in late 2002, whether it would expect a State company or statutory authority to put Revenue on notice of the need to review and update those guidelines and whether Revenue would have expected them to have elaborated on the apparent flaws in its approach to this matter in its correspondence with Revenue. It is most likely that such notice would have led to a review of the guidelines and, had this happened, so much time, money and resources would not have been wasted on this flawed and needless dispute. We would also ask the Revenue Commissioners to confirm whether they would have provided the confirmations to CSID and its advisers that it had been made aware of the professional advice held by CSID in late 2002.

Third, we will write to the Department of Finance asking if it had been made aware of the 2002 advice from PwC to CSID and, if so, would it have advised CSID on the matter in which it did.

That deals with correspondence and the issues arising from the report. I call Deputy Connaughton.