Brian Hayes (Dublin South West, Fine Gael)
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Question 951: To ask the Tánaiste and Minister for Education and Science if she will confirm that when her Department was responsible for organising the State examinations, that is prior to March 2003 when the State Examination Commission was established, that for some years, the payment of VAT by her Department and subsequently by the State Examinations Commission in respect of the paper printing contracts, that VAT payments were not made to the Revenue Commissioners in the respective year in question, and when they were paid eventually, the payments were late, and only paid when highlighted by outside bodies; and if she accepts that the failure to pay VAT by any public body on work commissioned outside the State represents a fundamental unfairness to those businesses in this State who have to charge VAT at source; and if she will make a statement on the matter. [15289/10]

Mary Coughlan (Donegal South West, Fianna Fail)
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The State Examinations Commission (SEC) assumed responsibility for the operation of the State Certificate Examinations from the Department of Education and Science from 2003 onwards. The Commission is responsible for the operation of all aspects of the Established Leaving Certificate, Leaving Certificate Vocational Programme, Leaving Certificate Applied and Junior Certificate Examinations including written, oral, aural and practical work.

Competitive tendering in line with national and EU procurement guidelines, directives and regulations is the standard procedure in the procurement processes of the SEC. In 2003 it was brought to the attention of the SEC that the methodology in place for the application and payment of VAT on certain purchases from companies outside the state was not in accordance with the Revenue Commissioners' VAT rules. This issue was reviewed swiftly and remedial action was taken to regularise the position for prior years and to ensure that the tax treatment of all future payments would be subject to the applicable regulations for intra- community acquisitions and fourth schedule services.

Following the review in 2003 and the subsequent recalculation of VAT on payments to companies outside the state, payments of VAT were made to the Revenue Commissioners for prior years outside of the normal schedule for payment. It was not the intention of the SEC, or prior to its establishment the Department of Education, to incorrectly apply the VAT rules to these or indeed to any other payments. At all times the SEC, and the Department, acted in good faith in the discharge of their tax liabilities.

It should be noted that whether VAT is charged at source by businesses in the State or applied on a self-accounting basis by the recipient of the good or services, the ultimate payer of the VAT is the recipient of the goods or services.

It must be also noted that as part of the evaluation of tenders for the question paper printing contracts for the years in question the VAT liability was correctly taken into account in respect of all companies at the tender evaluation stage. While the calculation and payment of the VAT was not made within the prescribed time period, this related to liabilities at the payment stage after the service had been provided. I would like to confirm that no tendering company was disadvantaged in any way in the tendering and procurement processes undertaken by my Department, or the SEC, as a consequence of the VAT issue.

Since this issue was raised and dealt with in 2003 the State Examinations Commission has continued to meet its VAT obligations as required by the Revenue Commissioners.