Press conference: Revenue Commissioners' Annual Report 2017
Introductory comments by Commissioner Niall Cody, Chairman
On behalf of the Board, I am pleased to present our Annual Report for 2017. This is Revenue’s 95th Annual Report and the first progress report on our Statement of Strategy for the period 2017-2019. Our two strategic pillars for this period are to provide service to support compliance, and to confront non-compliance. This morning, I will give you an overview of 2017 results which reflect the significant progress made, and I will also talk about some of our plans for 2018 and into the future.
Tax returns
In 2017, Revenue collected €50.76 billion in taxes, duties and levies. This is the seventh consecutive annual increase and €2.8 billion more than in 2016. There were increased receipts from taxes on income, up 4%, VAT up 7% and Corporation Tax up 11%.
We are today publishing a number of Revenue research papers and reports on capital taxes; corporation tax; excise duties; income dynamics and mobility trends; and local property tax. These are important contributors to policy discussion, by providing quality statistical and economic analysis. Today we are also publishing the results of our 2017 survey of small and medium enterprises.
The international tax landscape continues to change dramatically as countries deal with the challenges of fair and effective taxation in the face of increasingly globalised trade and digitalised economies. This report sets out Revenue’s ongoing extensive engagement internationally on improved co-operation and transparency, the expansion of Ireland’s tax treaty network and the exchange of information for tax purposes.
Tax collection
Revenue plays a vital role in the economy by collecting taxes and duties due to the State. We are strongly focussed on maintaining high timely filing and payment rates. The overwhelming majority of taxpayers are voluntarily compliant as evidenced in 2017 by continued high voluntary compliance rates of over 90% across all taxes. We recognise and value the important role that taxpayers, businesses, and tax and customs practitioners play in this regard.
In order to safeguard tax receipts due to the Exchequer and in support of the compliant majority, Revenue intervenes early when tax payment and filing obligations are not met. In 2017, gross debt available for collection was down by €146 million (13%) on the comparable figure for 2016. Our early intervention also leads to better outcomes for those taxpayers who co-operate and engage with us honestly. At the end of 2017, 10,406 such taxpayers, who had temporary payment problems, were in instalment arrangements with us worth €94 million. On the other hand, the small minority who either refuse to engage with us, or refuse to pay their tax, are met with determined collection and enforcement action and the additional cost of that action. In 2017, we collected €212.4 million in 37,423 debt enforcement cases.
Supporting voluntary compliance
We try to make it as easy and straightforward as possible for taxpayers to be voluntarily compliant, pay the right tax and duty at the right time, and claim their entitlements. During 2017, we improved our online services and there are now over 1.8 million registered users of our myAccount service. We handled more than 2.5 million telephone calls and have introduced an appointment service in 17 of our 18 public offices, eliminating queuing time for our customers. Our report today provides detail on some of the significant service improvements we implemented during the year and the positive effect these changes have on the quality of our service to taxpayers. Our re-designed website, launched in June, is easily accessible on all devices and provides clear information in plain language, for taxpayers and practitioners. Indeed, in our SME survey referred to earlier, 84% of respondents reported that they found our re-designed website easy to use. We will continue to improve, and encourage customers to use, our online services, which are the quickest and most effective way to do business with us. For example, we provided an online system in January for first time buyers to claim relief under the Help to Buy incentive and by year end, claims with a total value of almost €69 million were approved. For self assessed income tax payers, the ROS Form 11 is available to complete online. Today we are announcing an extension of the return filing and payment date for 2018: Customers who both file and pay online can set their payment date to 14 November next. The modernisation of the PAYE system and move to real time PAYE on 1 January 2019 will transform the administration and collection of payroll taxes, and bring very significant efficiencies and improvements in accuracy and transparency for Revenue, employers and employees, and I will return to this later.
Confronting non-compliance
Revenue supports compliant taxpayers by dealing firmly with those who try to cheat or ignore their tax and duty obligations. While reducing to a minimum our intrusion on compliant taxpayers, we target a diverse array of risk, from failure to make a tax return to outright tax and duty fraud. Our compliance framework is underpinned by data analytics and close co-operation with our counterpart agencies nationally and internationally. We deploy our resources in response to existing and emerging risk. In 2017 we conducted over 655,000 compliance interventions across the full spectrum of our taxpayer population, ranging from straightforward assurance checks to audits and investigations. Revenue interventions yielded €491.9 million for the Exchequer in tax, interest and penalties. We published 289 tax defaulters in the Quarterly Lists of Tax Defaulters, in respect of settlements of over €53 million. We seized nearly 1,600 vehicles for various offences. We seized illegal drugs valued at almost €60 million and illicit tobacco products valued at over €20 million, in operations throughout the State. Revenue prosecutions resulted in Court fines totalling €5.36 million in 1,643 summary cases, and 24 criminal convictions for serious tax and customs fraud.
Fiscal fraud, smuggling and drugs
Criminal activities including drug smuggling, smuggling and trade in illicit alcohol and tobacco products, and fuel fraud, feed the shadow economy, threaten legitimate business, damage communities, public health and the environment, and often fund organised crime. We work in close co-operation with our counterpart tax and law enforcement agencies nationally and internationally to intercept, disrupt and prevent these criminal activities.
The illicit drug trafficking market continues to be one of the most profitable areas for organised crime groups who operate in the European Union and globally. Revenue supports the Supply Reduction Pillar of the Government’s National Drug Strategy and during 2017 we made over 6,000 seizures of illegal drugs. The illicit tobacco trade is also global. Tobacco smuggling and associated illegal activities pose significant threats to the Exchequer and to compliant businesses. Today we publish the results of the 2017 Illegal Tobacco Products Research carried out by IPSOS MRBI on behalf of Revenue and the National Tobacco Control Office of the HSE, which reports that 13% of cigarettes consumed in the State were illicit, up from 10% in 2016. Our strategy is to disrupt the supply chain of illicit tobacco products, seize the product and prosecute those responsible. In 2017, we seized over 34 million cigarettes and nearly 1,800 kilos of tobacco. Last month, in the culmination of an intensive intelligence-led investigation, Revenue dismantled an illegal commercial-scale cigarette factory in County Louth. Tackling and confronting the illegal tobacco trade will remain a high priority for us.
Over recent years, we have implemented a wide ranging strategy, encompassing all stages of the mineral oil supply chain, to tackle the problem of fuel fraud, particularly fuel laundering. In January 2017 we conducted the second National Random Sampling Programme of auto fuel traders, testing for the presence of the new fuel marker and for the second consecutive year found no evidence of laundered fuel. We undertook a third such programme in the first quarter of 2018, this time expanded to include hauliers and other businesses in the transport sector and will publish the findings when available. While there is evidence that our initiatives have strengthened controls over the market for mineral oils, there is no room for complacency. We remain alert to the resourcefulness of those involved in criminality in the fuel trade and we continue to closely monitor the fuel supply chain and target existing or emerging threats.
Tax evasion using offshore structures and accounts
We have long recognised the serious risk to the Exchequer that is posed by offshore tax evasion and the aggregate yield from our work in this area since 1999 is more than €2.9 billion in tax, interest and penalties. We reached a significant watershed last May, when at the deadline of the Foreign Income and Assets Disclosure initiative, we had received 2,786 disclosures with a declared value of almost €84 million. Since that deadline, tax defaulters who try to hide assets offshore now face penalties of up to 100% of the tax evaded, publication on the List of Tax Defaulters and potentially, criminal prosecution. Tax authorities worldwide now co-operate very closely to target those who seek to hide their profits or gains offshore. The automatic exchange of information between countries provides us with greater visibility as regards the offshore assets and income of Irish residents and the role of intermediaries and institutions in facilitating offshore evasion. During 2017, we had the first automatic exchange of financial account information between Ireland and 50 other countries and we are using this information to identify and pursue tax defaulters engaged in offshore tax evasion and avoidance.
Tax avoidance
Tax avoidance schemes that seek to use legislation other than as intended, threaten tax yield and the perceived fairness of the tax system. In 2017 we settled 1,352 tax avoidance cases, 15 of which yielded €3.8 million in tax, interest and penalties. We are persistent and determined in challenging these schemes and are currently contesting 883 such cases.
Our people
At the end of 2017, there were 6,372 people, equating to 6,007 full time equivalents, working in Revenue, in more than 42 locations. Our report today provides insight into the huge variety of roles and interesting career opportunities in Revenue. Over the last three years we have made some structural changes in relation to central, regional and national functions and in service delivery. We are an agile, capable and results-focussed organisation and are evolving and adapting our structure, as we respond to challenges and opportunities, both domestically and internationally.
As we deal with the ongoing loss of experienced staff to retirement, we are focussed on capability building and innovation. In 2017, we appointed 546 staff at all levels, from open recruitment and interdepartmental competitions. We invest in our people and support our staff in their pursuit of relevant professional and academic qualifications. This year we marked the graduation of the 1,000th Revenue staff member from our training partnership with the University of Limerick. We aim to be an employer of choice and will continue to recruit new staff and to support, encourage and invest in training, development, innovation and technology.
Looking ahead
Our core priority is to collect the tax and duties payable to the Exchequer in a fair and efficient manner and our strategy is straightforward. It is critically important that we provide high quality and effective service and support to taxpayers and businesses to be voluntarily compliant. It is equally important that we support compliant taxpayers and protect Exchequer funds by tackling non-compliance effectively and in a way that changes behaviour. In 2018, we will examine the alignment of our structure and resources, with risk.
We will continue to respond to the opportunities and challenges of an increasingly global and digital world, with agility and innovation in technology and business practice. The broad economic impact of Brexit will depend on political outcomes. We are concentrating our efforts on scaling up our ICT framework and aiming to have effective, customer centric systems at the heart of how we support voluntary compliance. Revenue’s objective in this regard is to facilitate trade by maximising the free flow of goods to the greatest extent possible. We will continue to make the most of the simplification provided for within the Union Customs Code, focusing on the fair and efficient implementation of possible tax and customs procedures, post Brexit.
PAYE modernisation will fundamentally change the administration and management of PAYE, for employers, employees and Revenue. This project is a key corporate priority for us this year. We are concentrating on helping employers prepare for the upcoming changes and will intensify this programme between now and the end of the year. We will use outreach events, employer customer service visits and a series of nationwide seminars to explain how the new system will work and ensure that all employers are ready for the new reporting requirements. We have been working closely with the payroll software providers for over a year to ensure their software packages will enable employers to meet the new reporting requirements. This March, we launched a test facility so that payroll software providers can verify that their software conforms to the published Revenue specifications. This allows for a nine month testing window before the new reporting arrangements commence. The transition to real time PAYE on 1 January 2019 represents an important step in the process of continuous improvement in service, compliance and efficiency in our administration of the tax system.
I mentioned earlier our ongoing challenge in dealing with the loss of experienced colleagues to retirement and I want to take this opportunity to pay particular tribute to Commissioner Liam Irwin, who retired from the Board last January. I know I speak for my fellow Commissioners and all Revenue staff and management, in wishing Liam all the very best in his retirement. Finally, I want to acknowledge that the bedrock of our capability is the dedication and professionalism of our staff who operate across a wide spectrum of service, compliance, enforcement and support roles. Our achievements in 2017 would not have been possible without them, and on behalf of the Board, I thank our management team and all our staff for their continued commitment and effectiveness in the achievement of these results.
25 April 2018