Mr. Niall Cody:

On challenges, court cases and tax litigation, tax is and has been a very litigious area. My counterpart in the Department of Social Protection was decrying the idea that some of the social welfare cases now involve legal people; I said, "That is our territory. It has always been our territory". In the Tax Appeals Commission, there has been significant improvement in dealing with a whole legacy of cases and the legacy cases are now nearly gone from the tax appeal situation. We will start to see cases coming through in a shorter time frame. Whether it is seven or ten years, by the time a case goes to appeal - it used to have to go through the Circuit Court but that is no longer there - it must first have gone to the High Court, the Court of Appeal and the Supreme Court. There is also the potential to go to the European courts. There are a few types of cases. One is a case which is trying to clarify what is intended in the legislation.

I have been asked if I mind losing cases. I try not to see it as winning or losing. Some of them are clarifying the treatment of the law. There are other cases that I feel strongly about winning or losing. There are cases relating to avoidance that we pursue. While you will not find me talking about the matter, the publication of the determinations in tax appeal cases - and in fairness to The Currencyand much of its subsequent coverage in this regard - has been a positive part of the tax environment. In those types of cases, if we win, we seek our costs, as happens normally. In cases where we lose, we will always end up paying costs.

That is just the nature of the system that we are in. The other part of the realignment at the time was with our large cases division. It used to deal with large cases on high-wealth individuals, HWIs. In many ways, because of the scale of the large cases, the high-wealth work was never fully resourced. In 2017 we divided them and an assistant secretary-led division was resourced to deal with high-wealth individuals but also to deal with anti-avoidance, which would have been carried out mainly by the tier of people below the HWIs. Again, we continued to invest in that and it is really important work because it goes to the heart of trust in the system.

The debt warehouse is unprecedented, there never was such a thing before. I remember initial discussions, or chat rather, about what we should do. We suspended enforcement and the collection of interest in March 2020 but it would have been unsustainable to do that without legislation. Half the people would give out to us for not collecting tax and the other half would give out to us for collecting it. The debt warehouse became a very useful weapon in our armoury. Hopefully, we will not have to use it again in a lifetime. We structured it in such a way as to support businesses but also to support businesses when the pandemic finished. There was the year interest free and then the 3% cuts in from next January and next May for the people who were extended because of the new health restrictions last November. In September, when we saw the impact of the energy crisis we extended that period for a year, for people to engage with us. We have extended it 3% and that is a really attractive rate. I am not surprised because I think the €26 million is very low and most of that has happened because either a company went into liquidation or examinership or the small company administrative rescue process, SCARP. The €26 million is neither here nor there in the context of €2.5 billion.

The extension was really necessary because of the energy crisis. It depends on what is happening in a year's time but what we want to do is have a tailored arrangement for each of the companies. We will not have something where everybody has to pay 40% down and enter into an instalment arrangement over two years. We will look at the circumstances of each case. Some businesses are paying, because right now there is the zero interest getting cleared before the end of December. The reality is that there are over 70,000 cases with money in the warehouse and of those, 7,300 of them have debt in excess of €50,000. Many of them have essentially their January-February 2020 liability. They closed down, then they started partially trading and they paid their current liability. They left their January-February debt there. Some of them are very small, only a few hundred euro, but about 7,300 that have debt in excess of €50,000. That accounts for €2.1 billion of the €2.5 billion. Essentially, that is the chunk of the money. I would be very confident that a significant portion of it will be paid. I think that there are businesses currently looking at their banking finance and the interest rates. They look at the 3% and they say if we could pay off more expensive debt, it makes sense to leave the Revenue debt sitting there. Also I think the inflation will have a significant impact on the issue. Two years ago, in the context of budget arithmetic, a figure was put in of a 25% write-off but it was not scientifically based, it was just recognising that there would be a write off. Generally, for debt that is not paid within a first few months, they level a write-off. But this is planned debt. The important thing that people do not take seriously enough is that to retain the warehousing facility, people have to file and pay their current returns on time. We can see it very clearly, probably half of the businesses in the warehouse are totally abiding by those dates and the others are not as scrupulous. We are going to be quite firm on that because that will undermine the system. The message that I would like to give is that we continue to engage with businesses and if they cannot pay their current liability, they need to engage with us. If they do not, then not only will we be looking for the current liability but we will be cancelling the warehousing facility. If a business's warehousing facility is cancelled it will lose the value of the zero rate and the 3% rate from the start, so the money that the business owes for January-February 2020 would then be liable to 10% interest from 2020. That is how it is legally structured and the key issue is that businesses pay their current liability. I do not think that everybody fully understands that. We were quite lenient through the process but that is a message that needs to be heard.

At the Committee of Public Accounts last week we had a chapter about a pragmatic approach to tax clearance. The challenge is that if we had employed tax clearance as rigidly as we could have, then X number of people would not have qualified for the support systems. We could not have done that when we had a debt warehousing system that if they had, they would not have had to pay the money. Now we do not have a debt warehousing absolution, that is really important. When we talk about a business's due date for VAT, for September-October is 23 November, a lot of small businesses treat that as 23 January. We will be very much following the legislation around due month. From our perspective, this is an opportunity for businesses to move to that idea of the due month actually meaning the due month. When the wage subsidy was first introduced, we built it on due month compliance, payroll compliance at the end of February, and people were surprised. Many people were used to sending it in six months late every time. We might even have had representations about it from Members of the Oireachtas lobbying for businesses saying that they meant to do it on time. This is a really serious consequence of not doing things properly. If someone has a difficulty with their current liability they should file it and engage with us. We will not throw any business that engages with us out of the warehouse.