Michael Healy-Rae (Kerry, Independent)
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32. To ask the Minister for Finance the reason that the Revenue Commissioners are imposing late interest and charges on VAT liabilities, which are filed and paid in full no more than a few days late, when businesses are already struggling with the high cost of living and there is no loss to Revenue; the reason this is being allowed; and if he will make a statement on the matter. [26084/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Interest on late payment of tax is a statutory charge which Revenue is obliged to apply. These statutory charges are designed to compensate the Exchequer for loss of revenue through late payment of tax, to encourage timely payments in future and to ensure fairness and equity for the vast majority of taxpayers who file and pay their taxes on time without any follow-up from Revenue.

Customers are legally obliged to pay their full tax liability on time. If a business does not pay the tax that is due on time, Revenue is required to apply the necessary measures to address the non-compliance. Such measures may involve applying statutory interest charges where tax payments are late or enforcement where there is no meaningful engagement in relation to a tax debt. This is important to maintain a ‘level playing field’ for the vast majority of taxpayers who meet their tax obligations in full and on time.

I am advised by Revenue that in the first instance where a business is late paying a VAT liability, a warning letter issues to the taxpayer explaining that the payment was late, but interest is not imposed on this occasion given that it is a first violation. However, the taxpayer is advised that interest will be applied on any future late payments.

Revenue’s clear preference is always to work with taxpayers experiencing temporary cash-flow difficulties and to identify and agree mutually acceptable solutions where possible. There are a number of ways in which Revenue provides assistance to taxpayers experiencing difficulties in paying their tax liabilities. For example, Revenue offers taxpayers flexible Phased Payment Arrangements to pay off their debt in instalments over a reasonable period of time. In addition, payment breaks and payment deferral options are available when temporary cash flow difficulties arise during the arrangement term.

Revenue encourages taxpayers to engage early when payment difficulties arise and will always have regard to the particular circumstances of each case. Revenue has a strong track record of successfully working with individuals and businesses to resolve their payment difficulties without resorting to enforcement action.