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Annual Report of the Ombudsman 2003

Chapter 4 - Redress for Taxpayers - Implementation of Recommendations

Redress for Taxpayers- Implementation of Recommendations

Following my predecessor Kevin Murphy's, Special Report to the Oireachtas - "Redress for Taxpayers" - the intervention of the Joint Oireachtas Committee on Finance and the Public Service resulted in the full implementation of his recommendations (full details of the recommendations can be found at page 36 of the Ombudsman's Annual Report for 2002).

There were two issues of concern in the investigation:

1. time limits on retrospective refunds of tax wrongly collected, and
   
2. compensation for loss of value where tax refunds are made in cases where overpayments of tax were the result of maladministration.
   

I understand that Revenue has made refunds of tax, as well as compensation payments for loss of purchasing power, to the widows whose complaints were at the heart of the investigation. Following acceptance of the recommendations in full, the Revenue also undertook a range of initiatives to ensure that any similarly affected widows would be identified. To date, refunds of taxes have been made in 131 cases, compensation payments have been made in 185 cases, and an additional 49 cases are still being reviewed.

The total cost of implementing the recommendations to date amounts to just over €900,000. The potential cost of implementing the recommendations in full was estimated by the Revenue at the Oireachtas Joint Committee briefing as running to €3.8 million. This estimate had been relied on as a defence against implementation. The significantly lower cost of implementation must give rise to regret that more realistic and accurate estimates had not been prepared at an earlier stage which, perhaps, might have facilitated an earlier resolution of the entire issue.

A general scheme of compensation for loss of value in respect of refunds of taxes - recommendation five of the Special Report - was introduced with effect from 1 November 2003. The scheme provides for a general right of repayment of taxes and duties, as well as payment of interest on all such repayments subject to certain conditions. The scheme, which is subject to transitional arrangements, introduces a new, and more restrictive, four year limit for making claims to replace the existing 10 year limit.

Payment of interest will be made by Revenue from the date that tax was paid until the date of repayment, in cases where Revenue has made an error in the application of the law. In all other cases, including repayments of preliminary tax, interest will be payable from the period beginning six months after a valid claim for the repayment has been made, where the Revenue has not made the repayment by that time.

I welcome the response of the Revenue in implementing the recommendations of the Special Report. I am particularly pleased to see the flexible approach which Revenue has adopted in the case of certain widows who might not otherwise have been entitled to refunds and compensation. This group of claimants had not, in fact, claimed the refunds due to them under the O'Carroll judgment within the required time frame and could, in theory, have been excluded from the import of the Ombudsman's recommendations. Revenue has in fact adopted a pragmatic and flexible approach in these cases and full payments have been made.

The examination and investigation of the issues leading to the preparation of the Special Report in this case were long, complex and time-consuming for both my Office and the Office of the Revenue Commissioners. I am pleased - as I know Kevin Murphy was- that the final resolution of the case resulted in the acceptance and implementation of all recommendations and that the authority of the Ombudsman's Office has been affirmed. He and I also very much appreciate the vital role played by the Oireachtas and, in particular, by the Joint Committee on Finance and the Public Service.

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