Mr. Niall Cody:

I thank the Chairman for the opportunity to make my opening statement. In 2022, Revenue collected total gross receipts of almost €118 billion, including €22 billion in non-Exchequer receipts collected on behalf of other Departments and agencies. The net Exchequer receipts of €82.4 billion were up by 22%, or €14.9 billion, on 2021. Preliminary results for 2023 show that Revenue collected total gross Exchequer receipts of €127 billion.

Revenue’s gross expenditure in 2022 was €492 million, compared with €489 million in 2021. Revenue had 6,851 staff serving at the end of 2022 at a cost of €351 million. The other main item of expenditure was ICT, which accounted for some €72 million in 2022.

A new structure for LPT came into effect from 2022 whereby owners were required to revalue their properties based on the market value at 1 November 2021. The revised valuation determined the amount of LPT to be paid for each year from 2022 to 2025. Revenue’s administration of the tax, covering both service and compliance management, has shown that the majority of property owners make reasonable and honest efforts to value their properties. This aligns with the findings of our detailed analysis and comparison of self-assessed property valuation bands across the 31 local authority areas with CSO data.

The payment compliance rates for LPT for 2022 and 2023 are 97% and 95%, respectively.

The debt warehousing scheme was introduced in May 2020 to provide vital liquidity support to businesses impacted by the Covid-19 pandemic. The scheme allowed for the parking of certain tax liabilities relating to periods during which trading was restricted by public health measures. Under the terms of the scheme, most businesses were due to enter into an arrangement with Revenue to address their debt with effect from 31 December 2022. In October 2022, however, recognising the challenging economic situation facing businesses, Revenue announced a significant extension to the scheme whereby the timeline for making arrangements to address warehouse debt was deferred to 1 May 2024. Debt that remains in the warehouse is subject to an interest rate of 3% per annum, on condition current tax returns are filed and corresponding liabilities paid on time. This is a significant reduction from the standard interest rates of 8% and 10% per annum that normally apply to late payments of tax.

The balance in the warehouse peaked in January 2022 at €3.2 billion. At the end of 2023, approximately 58,000 taxpayers were availing of the scheme, with €1.756 billion currently warehoused. Almost 40,000, or 70%, of those availing of the scheme have warehoused debt of €5,000 or less, of which almost 30,000 have debt of €1,000 or less. Revenue’s approach to the payment of warehoused debt from 1 May 2024 will be flexible and tailored to each business based on its capacity to pay. Revenue will work with businesses so that they can continue to meet current liabilities as they arise, secure the viability of their business and minimise their interest costs.

Corporation tax losses are a standard feature of tax regimes worldwide. Data shows that the losses used per year, as opposed to carried forward, are broadly consistent, ranging from just under €10 billion to just over €14 billion in the most recent five-year period. Losses carried forward into 2021 increased by €10.6 billion to just over €222 billion. Approximately 28,000 companies used losses in 2021 totalling €12.2 billion, at a cost to the Exchequer of €1.5 billion. Losses carried forward can only be used where the company incurring losses becomes profitable.

The committee has also expressed an interest in the classification of employment, for which I have provided a briefing. Revenue’s role is to determine employment status for income tax purposes. Responsibility for PRSI classification rests with the Department of Social Protection, while the consideration of matters relating to workers’ rights falls within the remit of the Workplace Relations Commission. On 20 October 2023, the Supreme Court delivered an important judgment on the key factors to be considered when classifying an individual’s employment status for income tax purposes. The judgment brings welcome clarity and provides a decision-making framework to assist businesses to correctly classify workers between those who are employed or self-employed. Revenue will shortly issue detailed guidance to explain the implications of the judgment for tax purposes and is working closely with colleagues in the Department of Social Protection and the Workplace Relations Commission to update the joint code of practice on determining employment status.

I thank all Revenue staff for their professionalism, dedication and commitment, without which our achievements in 2022 would not have been possible. I 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 the committee’s questions.