Mr. Niall Cody:

I understand that today’s meeting is to focus on: the 2020 appropriation account; the 2020 account of the receipt of revenue of the State; chapter 12, controls over the TWSS; and chapter 13, Revenue’s management of suspicious transactions. I am accompanied by Gerry Harrahill, commissioner and director general of Customs and Excise and Brian Boyle, accountant general.

In the context of today’s discussions, I draw the committee’s attention to section 851A of the Taxes Consolidation Act 1997 and my obligation to uphold taxpayer confidentiality. In 2020 Revenue collected total gross Exchequer receipts of €82.3 billion, including €15.4 billion in non-Exchequer receipts collected on behalf of other Government Departments and agencies. The net Revenue receipts were €56.2 billion, which was a decrease of €2.1 billion or 3.6.% on the 2019 figures. Up to the end of October this year the net Exchequer receipts collected by Revenue were over €50.2 billion, some €8.4 billion or 20% more than the same period last year. Revenue’s gross expenditure in 2020 was €467 million compared with €449 million in 2019, an increase of €18 million or 4%. The increase primarily relates to increased staffing levels, ICT expenditure and Brexit infrastructure costs. Revenue had 6,680 staff serving at the end of 2020, with €329 million of Revenue’s €467 million expenditure related to salaries. The other main item of expenditure was ICT, which accounted for €64 million in 2020.

In chapter 12 the Comptroller and Auditor General reviews the controls over the TWSS. The scheme was introduced at an unprecedented pace, such was the immediate and serious impact of Covid-19 on the cashflow and trading abilities of businesses, with Revenue making the first TWSS payments just four days after the scheme was announced. The technical infrastructure developed for real-time payroll reporting provided the platform that allowed us to deliver these vital financial supports quickly and efficiently to impacted employers and employees. The visibility of payroll data that PAYE modernisation gave us enabled us to design TWSS in an extremely limited timeframe and in a way that significantly reduced the opportunities for abuse of the scheme. Under the scheme, subsidies totalling €2.8 billion gross were paid to 67,222 employers in respect of 689,422 employees.

Beginning in June 2020 Revenue engaged in a phased programme of compliance checks on all participating employers. Compliance checks as at November 2021 are now 99.5% complete with 359 checks ongoing. Completed checks have confirmed 97.5% compliance by employers with the conditions of the scheme with Revenue accepting that the employers concerned had a reasonable expectation on entry into the scheme that turnover would decrease significantly. Revenue has recouped just over €29 million in TWSS related overpayments from 1,658 or 2.5% of employers. We also undertook a reconciliation exercise which identified an aggregate liability of €308 million, the majority of which related to the transitional period up to 5 May when we paid €410 per week per eligible employee to employers. Bringing the compliance and reconciliation exercises together, the aggregate amount of TWSS identified for recovery amounts to €324 million. Some €251 million of this has been repaid to Revenue, €60 million is included in the tax debt warehouse, €3 million is at appeal and a further €10 million is now available for collection.

In Chapter 13, the Comptroller and Auditor General reviews Revenue’s management of STRs. Revenue has been in receipt of STRs since 2003. STRs provide vital intelligence in the investigation of money laundering and terrorist financing as well as in the detection of tax evasion. Based on global developments and the expansion of designated reporting entities, it is expected that the number of STRs received will continue to rise as increased measures are introduced to counter money laundering and terrorist financing. In September 2020, Revenue introduced a new online system to require all designated bodies to submit STRs online through the Revenue online service, ROS. Enhancements were also introduced to improve how STRs are processed within Revenue, including automatic uploading to linked profiles in Revenue’s case management system. The five recommendations made by the Comptroller and Auditor General have been agreed by Revenue.

As was the case for many other organisations, 2020 was an unprecedented year for Revenue. Our investment in real-time payroll reporting meant that working with the payroll software sector we were able to quickly provide financial support directly to businesses, while also continuing with our core business as a tax and customs administration. Brexit resulted in a fundamentally changed trading environment between Ireland and Great Britain since 1 January 2021. Brexit infrastructure and accommodation costs were over €9.6 million at Dublin Port and Rosslare Europort, with further expenditure of over €14 million expected in 2021. Further changes to the UK Government’s import requirements from January next will mean more adjustments. We will continue to work collaboratively with trade and business, both collectively and individually, to ensure trade flows remain as efficient as possible while meeting our Single Market and customs union obligations.

The TWSS was replaced by the EWSS from 1 September 2020. EWSS subsidy payments to date have amounted to €5.65 billion while PRSI credits have amounted to over €877 million. The total amount claimed under the Covid restrictions support scheme to date is €704 million in respect of 25,500 premises. The total amount paid out under the business resumption support scheme has been €6.2 million in respect of 1,680 businesses. In addition, there was over €2.8 billion of debt warehoused at the end of October 2021. I have responded to the committee in recent times on matters related to the misclassification of workers as self-employed and arrangements in place for couriers since the late 1990s; contracts that were non-compliant with procurement guidelines; and a tax settlement in a specific case that was of interest to the committee.

Remote working, facilitated by our secure and sophisticated ICT framework, has been the norm for the majority of Revenue staff throughout the pandemic. On a daily basis Revenue staff engage with taxpayers, take and make telephone calls about a wide variety of issues such as Brexit; tax repayments; local property tax; complex international tax issues; and the Covid support schemes. In 2020 and 2021 there have been significant seizures of drugs and cigarettes and we continue to work closely with An Garda Síochána and our international partners in tackling illegal activity. Revenue staff have responded excellently to the changed environment arising from Covid-19. I take this opportunity to thank them for their resilience, commitment and professionalism. I again draw the committee’s attention to section 851A of the Taxes Consolidation Act 1997 and my obligation to uphold taxpayer confidentiality. Subject to this constraint, I am happy to answer members' questions.