Terence Flanagan (Dublin North East, Independent)
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160. To ask the Minister for Finance his plans to eliminate VAT charged on fees involved in home owner bankruptcy proceedings; and if he will make a statement on the matter. [31280/14]

Terence Flanagan (Dublin North East, Independent)
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249. To ask the Minister for Finance his plans to reduce the costs involved in a home owner being made bankrupt, including eliminating VAT charged on court fees; and if he will make a statement on the matter. [31281/14]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 160 and 249 together.

With regard to reducing the costs involved in a home owner being made bankrupt, I have been informed by my colleague, the Minister for Justice and Equality, that fees charged in the courts are set by means of Statutory Instrument. Court fees orders are made by the Minister for Justice and Equality with the consent of the Minister for Public Expenditure and Reform.  During 2013, the Courts Service carried out a comprehensive review of court fees. Court fees in connection with bankruptcy proceedings are currently regulated by the Supreme and High Court (Fees) Order 2014 (S.I. 24 of 2014) which came into effect on 3 February 2014.

The fees comprise €190 payable on the petition for bankruptcy and €20 payable on the verifying affidavit.  As the Deputy will appreciate, court fee income forms a significant part of the funding for the general operation of the courts and the Courts Service keeps its fee structure under continuous review in accordance with the power given to it under the Courts Service Act. The Minister for Justice and Equality has no plans to reduce the fees payable under S.I. 24 of 2014. However, the operation of the law in this area is kept under review by her Department.

In addition, the Minister for Justice and Equality asks that the Deputy should note that fees are also payable to the Insolvency Service of Ireland during administration of a bankruptcy as set out in the Personal Insolvency Act 2012 (Prescribed fees in Bankruptcy Matters) Regulations 2013 (S.I. 465 of 2013). These fees are similarly kept under review. The law relating to bankruptcy was already changed in 2013 (by the Companies (Miscellaneous Provisions) Act 2013) to reduce the costs of bankruptcy for debtors by providing that the necessary publication could be made without charge on the website of the Insolvency Service, rather than by advertisements in national newspapers. The resulting saving for a person wishing to become bankrupt was estimated at up to €500.  

With regard to eliminating the VAT on court fees, I would point out that fees charged by the Court service are not within the scope of VAT.  Therefore, VAT should not apply to such fees.  I would however point out that VAT does apply to the services of all insolvency practitioners, including the activities carried out by liquidators, receivers, examiners and personal insolvency practitioners (PIPs) involved in the debt settlement arrangements and personal insolvency arrangements as provided for in the Personal Insolvency Act 2012.  The fees charged by insolvency practitioners are liable to VAT at the standard rate, currently 23%.  The Revenue Commissioners have considered in the past the nature of the services provided by PIPs and concluded that the services provided by a PIP do not qualify for exemption in accordance with the VAT Directive, Irish VAT Law, and relevant decisions of the European Court of Justice.