Pubs and other businesses in Mayo who are struggling to remain open due to difficulties in obtaining a tax clearance certificate when their tax payments are in arrears received some good news this week. Fine Gael TD for Mayo, Michelle Mulherin, has welcomed assurances provided to her by the chairman of the Revenue Commissioners that increased flexibility is being shown to businesses which are having difficulty getting their tax clearance certificate. As things stand, the Revenue Commissioners require a 40 per cent lump sum payment up front from businesses that are having difficulty paying. Revenue may now reduce this 40 per cent figure on a case by case assessment.
The Ballina TD raised the issue in the Dáil in the form of a parliamentary question after she became aware of a number of instances where pubs were being forced to close because they could not borrow money in order to afford to pay their tax. She has since been informed by the Revenue Commissioners of a “practical flexibility” plan being adopted by the authority which could see the possible reduction of a down payment for those engaged in phased tax payments.
This will enable many pubs to stay open as licence holders will be able to receive their tax clearance certificates which are needed to renew their annual liquor licence. Without this certificate they cannot renew their licence and therefore cannot lawfully trade.
According to Dep Mulherin those who are in tax arrears can enter into an arrangement with the Revenue to pay by instalments. “The practice of the Revenue Commissioners is to require a 40 per cent lump sum payment at least up front and of late they have been very rigid and inflexible of the lump sum percentage they require.” However, the deputy is concerned that as many businesses cannot get credit from banks, that this is proving a problem.
Dep Mulherin continued: “Anecdotally I believe this is happening across the country and some publicans have ceased trading because of this reason. This situation would also apply to other businesses which need tax clearance in order to do business and for those who tender for government contracts including businesses who provide supplies to schools or services to the council for example.”Year-on-year since 2008 there has been a sharp increase in the number of lapsed licences, with 570 lapsed licences recorded during that period. With the number of pubs closing, Dep Mulherin said this is “having a knock on effect on the country's unemployment figures and is of particular concern as we face into The Gathering 2013 events where we require our hospitality sector to be firing on all cylinders.” Apart from this, the deputy also said: “In many cases liquor licences were acquired at considerable expense, it is not in the interest of licence holders to let their licences lapse if at all possible.”
The deputy requested the Minister for Finance to ensure that the Revenue Commissioners take into account the difficulties being faced by licence holders and other self-employed tax payers, and that the 40 per cent lump sum pre-requisite of the Revenue Commissioners be relaxed.
The chairman of the Revenue Commissioners responded to the deputy last week by written correspondence and assured her that Revenue may reduce the down payment of 40 per cent in a phased payment situation for a tax clearance, depending on each individual case, if the taxpayer or business engages with Revenue “satisfactorily” to “address the outstanding tax debt and to restore compliance as quickly as possible.”
In the letter sent by Revenue to the deputy it is outlined that in 2012 there were on average 16,000 businesses in phased payment arrangements with Revenue. It outlines that phased payment situations are “a concession” and must be “fully justified to Revenue with reference to the specific circumstances of the individual taxpayer or business.”
Deputy Mulherin welcomed this “sensible” assurance, however she said, “It should be stressed there is no suggestion that the tax payer would avoid his/her tax liability but rather this gives a practical flexibility to allow an individual breathing space to trade his/her way out and pay tax and other trading debts accordingly. It is important to remember that these businesses cannot pay anything to Revenue if they cannot trade.”