John Kelly (Labour)
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I welcome the Minister of State to the House and congratulate him on his recent appointment.

I wish to raise a matter which has been brought to my attention in recent days and concerns how we do our business. The Minister for Finance should clarify the way in which the Revenue Commissioners collect taxes owed to them, which also threatens the viability of other businesses. I am seeking guidance from the Minister of State on this issue. I know a businessman in the wholesale trade who has been delivering to shops in the west for the past 20 years. He recently called to a couple of customers, but both shops had closed down and had "For Sale" signs outside. He was owed €24,000 by one of the shops. The shop had owed him €31,000 but he had worked with the owners to whittle the sum down to €24,000 over a period. The other shop owed him €27,000. The Revenue Commissioners came in and shut both shops down. This wholesaler has absolutely no recourse to recoup what is owed to him and, as we know, the Revenue Commissioners have first call on what moneys are owed. As a result their actions have threatened the viability of his business.

Apart from the fact that the banks would not lend to these two men so they could borrow to pay the Revenue and keep it at arms length, the viability of this man's business, employing seven people, is threatened. I am aware that the Revenue Commissioners have first call on all moneys owed to them. In this case it held a fire sale of assets of one of the businesses that owed my constituent €27,000 but stock work €27,000 was sold for €4,000 to the highest bidder. If my client had been aware that a fire sale was taking place he might have bought his stock back for €4,000 thus compensating him a little for his loss. It is not right or fair and we must find a better way to resolve such issues.

I am blue in the face speaking in the House about this and many related issues. Revenue's actions in this case is similar to those taken by county councils where a business is closed over an outstanding rates bill. If this company must put seven people on the dole it will cost the taxpayer €147,000 to allow Revenue gain just €4,000. There must be common sense and logic and I ask the Minister of State to relay my message to the Minister for Finance. Perhaps there is something that I or my client have missed and he has rights or recourse to get some of his money back. It is not right that his business and staff are threatened with unemployment by the action of the Revenue Commissioners.

Joe Costello (Dublin Central, Labour)
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I thank Senator Kelly for his contribution. I apologise that the Minister for Finance is in the Dáil debating the Bretton Woods legislation. I have great sympathy for the person the Senator referred to and I will convey his remarks to the Minister for Finance.

The Senator will be aware that the Revenue Commissioners are responsible for the collection of the bulk of taxes and duties due to the Exchequer. Its focus is on making sure that every individual and business complies with the responsibility to pay the right amount of tax or duty due in full and on time. Delays in the collection of tax revenues confer an unfair competitive advantage on non-compliant businesses. Revenue approaches the task of securing the collection of the critical taxes and duties in an efficient manner.

It is of vital importance to the economy to have a tax system that is efficient and easy to comply with, that is responsive to the needs of the taxpayer and other stakeholders and encourages and actively promotes voluntary compliance. Internationally, Ireland is among those countries that make it easiest for taxpayers to pay their taxes. In the recently published report of the World Bank Group, Doing Business 2012, Ireland was ranked in fifth position worldwide.

Revenue has invested significant resources in developing its online service, or ROS as it is more commonly called. The service is rated extremely highly both in Ireland and internationally. It delivers a 24-hour year round service. It also enables faster processing times for Revenue and reduced compliance costs for business and taxpayers.

Even in the current difficult economic and financial environment for businesses it is essential that they maintain and organise their financial affairs to ensure that tax debts are paid as they fall due. Revenue will not allow businesses to continue to trade if there is no capacity to meet tax debts as they arise into the future. To do otherwise would have a corrosive effect on our high, timely and voluntary compliance rates by businesses generally. Revenue encourages businesses and individuals experiencing payment difficulties to work proactively with it when difficulties arise. The purpose of this is to maximise the opportunity for an agreed approach to secure timely compliance and enable any possible tax debt to be cleared over a realistic timeframe. I welcome the fact that tax practitioners and trade representative bodies have recognised and supported Revenue's efforts in working with businesses to address tax payment difficulties.

A key feature of Revenue's approach to compliance and debt management is early intervention by its staff when payment and compliance problems arise. Sophisticated Revenue IT systems have been developed and refined to assist in the timely identification of cases for direct intervention on payment or returns compliance. The riskiest cases will be targeted first but there is a structured programme in place to ensure that all cases that are non-compliant in any form are examined and subject to appropriate intervention.

Permission from Revenue to pay a tax debt by a phased payment arrangement is a concession and must be justified to it by reference to the circumstances of each taxpayer or business. Every phased payment arrangement will include interest. Therefore, it can entail substantial additional financial costs for businesses but it is appropriate to ensure that compliant businesses are not disadvantaged. Accordingly, it is in the interest of a business or a taxpayer to minimise their exposure to interest by paying as much of the debt up-front and any balance over the shortest possible timescale.

Revenue is charged with the responsibility for collecting and securing the majority of the revenues required by the Government to fund State services. The majority of taxpayers and businesses readily fulfil their obligations to pay what is due and on time. Taxpayers and businesses can, and do, encounter cashflow problems but these must be addressed so that timely tax compliance is restored and assured. Addressing these problems, in consultation with Revenue, at the earliest opportunity is essential to avoid debt problems becoming insurmountable or where avoidable interest or enforcement costs are incurred.

With regard to the need for businesses to engage with Revenue, early positive and realistic engagement is necessary when tax compliance problems begin to emerge. Such an approach ensures that businesses maximise the opportunity of arriving at a successful and early resolution of compliance difficulties in a way that meets with Revenue's approval. Tardiness in recognising or addressing tax compliance problems merely serves to exacerbate the compliance challenge for businesses and taxpayers.

John Kelly (Labour)
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This is no reflection on the Minister of State but I know that he was handed a script to respond to my Adjournment matter. I would have got the same response if I had asked him to outline the job of Revenue. He was given a generic script that does not address my issue. Perhaps it is my fault because I did not ask a specific question when I sought to raise this Adjournment matter but I have clearly outlined the matter to him now.

Earlier the Minister of State said that Revenue will not allow businesses to continue to trade if there is no capacity to meet tax debts as they arise into the future. My constituent was able to work with a businessman to reduce his debt with the wholesaler from €31,000 to €24,000. Revenue was not able to do that. Please do not blame such people but the banks who are not playing their part.

The Minister of State now knows concerns and I would like, through legislation or otherwise, for such matters to be dealt with. It is ridiculous that we still forget that we have one pot of money. We are not just dealing with the budget for Revenue or other Departments. The funds come from one pot of money. If Revenue is happy to close a couple of businesses in order to secure €4,000 and put seven people on the dole at a cost of €147,000 to the taxpayer then it is no wonder we have problems. We need to do business differently.

Joe Costello (Dublin Central, Labour)
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I appreciate the Senator's comments. We are talking about jobs, employment, business, and small SMEs and the maximum should be done by everyone involved. Banks are supposed to be making money available yet Revenue is engaging, or supposed to be engaging, adequately with businesses with problems who clearly intend to sort their problems. That seems to be the way in the Senator's case where debt was greatly reduced.

I cannot answer the Senator's question regarding the business to which he referred but I am sure the Minister for Finance would be interested to know the details. I will bring the matter to his attention and it is an appropriate matter to be brought to the attention of Revenue and the banks on how they conduct business.