# Revenue - 16 years and counting



## WizardDr (23 Nov 2004)

The Chairman of the Revenue got all excited last week as they apparently now realise that tax evasion might have been widespread in the 1980s.  Apparently this was the view of the IMF when they told McSharry that Ireland did not have an economic problem then, but a tax collection problem.

Is it the case that they will seek to investigate lots of matters many years after the event and is this damaging to 'certainty' required by business going forward?


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## loadsofmoney (23 Nov 2004)

*a tactic*

Could this be a ploy by revenue ?? They know about the issue but let it slide for some years.... Helps with the Interest and fines etc. 
Will we be hearing in years to come, that revenue have "discovered " that a lot of landlords were not declaring their income during the late 90s etc. !! " 
or that people were buying properties abroad with "hot cash ". 
Surely revenue know about these things before they become billon euro bonazas ??
And if they don't why don't they just stop the first dog in the street..... and ask them .........


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## rainyday (23 Nov 2004)

*Re: a tactic*



> is this damaging to 'certainty' required by business going forward?


I guess it would only be damaging to those businesses who have been evading their taxes, and I'm not going to lose any sleep over them.


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## Tommy (23 Nov 2004)

*Re: a tactic*

On the contrary it could be damaging to:

(1) innocent individuals or companies who buy or invest in companies with concealed "tax issues". Even the best due diligence and indemities in the world might not have much practical effect in 15 or 20 years time

(2) banks, mortgage companies or others who lend to individals with such "tax issues" who might find themselves insolvent or bankrupt because of this a decade or two hence.

(3) innocent shareholders in (1) or (2)


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## rainyday (23 Nov 2004)

*Re: a tactic*



> (1) innocent individuals or companies who buy or invest in companies with concealed "tax issues". Even the best due diligence and indemities in the world might not have much practical effect in 15 or 20 years time


Caveat Emptor - If you don't want to take this risk, don't buy a company or structure the legalities of the purchase so that someone else bears the risk.


> (2) banks, mortgage companies or others who lend to individals with such "tax issues" who might find themselves insolvent or bankrupt because of this a decade or two hence.


What goes around, comes around. Given the role of the banks & mortgage companies in encourage a culture of tax evasion in Ireland, I'd find it hard to lose any sleep over this.


> (3) innocent shareholders in (1) or (2)


Given that the Irish banks have survived the taxation and other scandals of recent years without any material effect on their share prices, I don't think this is much of a real issue.


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## Tommy (24 Nov 2004)

*Re: a tactic*

Hi Rainyday

The problem is that justice delayed is justice denied. Many of the fiddlers of today (some of whom would be fiddling with other people's money, directly or otherwise) will either be dead, retired or otherwise beyond sanction if it takes 10 or 15 years for their sins to be exposed. It might make sense in a crude financial sense for the Revenue to wait for donkeys years to impose compliance on certain suspect elements of our economy (and then move in for a big financial kill) but I don't think it makes good civic or social sense for our society in the meantime particularly when in the short-term... 

(1) our children's health and education needs are underfunded and compliant taxpayers already face a heavy tax burden. 

(2) many people question their wisdom in being tax compliant when they see others appearing to get away with blatant evasion - thus adding to the evasion problem.


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## rainyday (24 Nov 2004)

*Re: a tactic*

Hi Tommy - I couldn't disagree with anything you say. I'm not saying that it is desireable to see such delays, or that it should be Revenue policy to explicitly engineer such delays. 
I understand that Revenue need to prioritise their investigations and allocate scarce resources carefully.

But I do think it is important that the root cause is laid firmly at the feet of the tax evaders, not Revenue. It is like blaming the Gardai or the NRA for our road death carnage, when the real cause is the individual speeding drivers.


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## XXXAnother PersonXXX (24 Nov 2004)

*Re: a tactic*

Rainyday, would you not feel like a victim if the company you are working for right now went belly up because of old 'tax issues', and you lost your job?


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## rainyday (24 Nov 2004)

*Re: a tactic*

Doesn't sound like a very likely scenario - Has there ever been a single case of someone losing their job through 'old tax issues'?


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## XXXAnother PersonXXX (24 Nov 2004)

*Re: a tactic*

If the revenue decides to punish a company because of 'old tax issues' then there is a reasonable chance that the revenue will bankrupt that company. Especially when you consider how ruthless and uncompromising the revenue is.

Of course this will result in a loss of jobs.


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## WizardDr (24 Nov 2004)

*Re: a tactic*

With the size of the Taxes Consolidation Act being bigger than the Bible, and the additional Finance Acts being written in language not clearly understood, my view is that I would be suprised if anybody could be fully tax compliant.

The sad fact about the DIRT investigations is that the Revenue told the Dail that they had no power to inspect accounts. This was true.

They had power to inspect and take away copies of non resident declarations since 1986 and they never told this to the Dail Committee. That is also true.

The fact that most Euopean countries have worse EVASION issues as regards tax on deposit interest is also true.

The Central Bank figures always included the extracts of Non Resident Balances on the Balance Sheet summaries of licensed banks.  That is also true.

Credit Union dividends were included as taxable from the very start. The fact that most did not bother to pay tax them nor declare them is also true.

The point is I do not see how 16 years elapses for Revenue to take action. I have a problem when a problem that was originally created by Revenue and recognised as an issue by them in 1986 - why then did they change the legislation - is left there until it is revived like a rotting corpse. They then selectively extract only arm of the 'tax evading' practice namely the non resident bit. 

For example if you totted up the annual interest paid by all the Banks every year before 1986 for residents in this country you would NEVER EVER get near the actual figure declared as interest by those that always declared it. This 'bit' has been missed by Revenue, Bird et al and is much larger than that above.

But thes the matter about Credit Union dividends - always taxable at the top rate before Charlies deal - was just ignored. Guess what thats also tax evasion.

Similarly 'civil service' allowances where not a single shred of evidence needs to be produced that you spent anything is surely the best example of 'tax evasion is what ever we (the civil service) say it is'. And leaving out car park spaces as part of the benefit in kind regime must surely rank as the best  'cannot be judge in your own case' example!


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## rainyday (24 Nov 2004)

*Re: a tactic*

Hi AP - I guess I'll take that as a 'No' answer to my question "Has there ever been a single case of someone losing their job through 'old tax issues'? ".


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## Tommy (24 Nov 2004)

*Re: a tactic*

This is nonsense. Practically every company or business that goes bellyup does so with significant sums owing to the Revenue. Sometimes these liabilities arise as a result of tax defaults detected in the course of Revenue audits. Every town in Ireland has numerous stories of local businesses closing after trouble arising from tax defaults or settlements. Innocent people invariably lose their jobs as a result.


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## rainyday (24 Nov 2004)

*Re: a tactic*

Hi Tommy - AP's question was in the context specifically of *old* tax issues after a sale or takeover. I'd be interested to hear any specific examples of where any employee has lost their job in such circumstances.


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## Tommy (24 Nov 2004)

*Re: a tactic*

I'm sure AP can speak for himself but I don't see any reference to a post-sale or takeover situation in either of his posts on this topic.


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## rainyday (24 Nov 2004)

*Re: a tactic*

Hi Tommy - That was clearly the context of the thread, as set by your original outline of the three scenarios. But for the sake of debate, let's ignore the sale/takeover issue. Are you (or other posters) aware of any example where an employee has lost their job through *old* tax issues where discovery of the tax issue was delayed by Revenue inaction? Note that the general situation of Revenue debts after company collapse does not imply that the Revenue debt was the cause of the collapse, or that the there were *old* tax issues involved.


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## XXXAnother PersonXXX (25 Nov 2004)

*Re: a tactic*

No matter what example is cited, how can it be proved conclusively that it was exclusively the old tax issue that caused the company's collapse? - I'm sure you'll find some way of arguing the point. It's a case of 'does smoking cause cancer? - well we're 95% sure.'

Does it make you feel happy to think that somehow companies never go bust through tax issues brought about by revenue's prior inaction? Do you think that is scenario is unlikely to ever happen?

The quagmire that is the Irish tax system will have its victims, and the gestapo will be ruthless.


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## rainyday (25 Nov 2004)

*Re: a tactic*

I think your ire at Revenue is misdirected. They don't cause the problem. The tax evaders cause the problem. Blaming Revenue in such circumstances is like the scene from Life of Brian where the guy from the Judean Popular Front complains about the Romans not giving them time to hide before they entered the room, as if there is some 'rules of the game' about how the authorities have to handle such scenarios.

If you evade tax, it is your problem. If you work for a company that has a culture of tax evasion, you may get hurt.


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## piercewhelan (25 Nov 2004)

*Re: a tactic*

XXXAnother PersonXXX says

"If the revenue decides to punish a company because of 'old tax issues' then there is a reasonable chance that the revenue will bankrupt that company. Especially when you consider how ruthless and uncompromising the revenue is."


Wherever did you get that impression of our lovely Revenue Service.

Just ask Charlie Haughey, Liam Lawlor, Ray Burke, et all, and they will tell you that they are grand friendly chaps. Im sure the conversation goes something like this, "OK We know you owe a few millions in back taxes and penalties, but just lash out a few hundred there and lets just call it quits, after all arent you after giving us a few little perks like free parking along the way". Poor old George Redmond just didnt play ball which is why he ended up in prison.


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## jem (25 Nov 2004)

*Re: a tactic*



> If you evade tax, it is your problem. If you work for a company that has a culture of tax evasion, you may get hurt.


And how is a person ment to know this???
rainyday to be honest at times your naivety at times supprises me. There is a big bad world out there with small businesses trying hard to keep going.That suffer badly from late payment by debtors which sents them into arrears with the revenue, the revenue then charge them exorbitant rates of interest on these late payments even though the owners are bairlygeting there. Some of the biggest culprits for late payments are the county councils where people do work for them. You ask has people gone out of business/lost their jobs because of the Revenue - most definatly, and ofton not because of the liabilities themselves rather the interest charged causing the problem.


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## rainyday (25 Nov 2004)

*Re: a tactic*

Hi Jem - I've made damn sure that I know the culture of a company before I join them, by doing good outside research and using my extended network to get the word 'from the inside'. If not, I'd be pretty sure that I'd get a good idea of the culture of the company within the first 3-6 months of working there. Of course, it is possible that a company could be up to some tricks at senior level and individual employees like me would not be aware of it. But in most cases, any employee should have a good feel for the standards, culture & ethics of the company within a few months of joining.

You seem to expect the Revenue to act as a bank for small businesses, funding their cashflow when they hit hard times. That is not my expectation of Revenue. Revenue are dead right to implement exorbitant rates of interest - without these rates, I've no doubt that the current situation would be far worse, and Revenue (& the taxpayers) would be exploited as a source of cheap cashflow for small businesses.

In the example you give, Revenue is not the cause of the company collapse. The cause of the collapse is poor cashflow planning. If everyone knows that the councils etc are slow payers, then they need to plan for these in advance. If it is not possible to manage such business in a profitable manner, then walk away - Don't take on the business if it is going to drive you under. 

But in any case, that is not the context of this thread. The context of thread relates to 'hidden' Revenue problems arising from old liabilities which remained hidden due to Revenue inaction over a long period. Your example has no relevance to this.


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## Tommy (26 Nov 2004)

*Re: a tactic*

Hi Rainyday

Do bear in mind that most boardroom skullduggery in any company will be, by its very nature, secretive and unknown to both current and prospective employees. This applies both to "tax issues" and also to other serious matters that can threaten the long-term viability of a company. Look at what happened to the employees of Arthur Andersen and Equitable Life, both of which were seemingly gilt-edged and highly reputable and professional companies - albeit ones that turned out to have hidden but ultimately fatal weaknesses. It is naive in the extreme for any employee (except for those in such positions that they are aware of their employer's most intimate secrets) to assume that it will never happen to their employer. 

(For example it is not inconceivable that any prominent Irish-based multinational company could find itself in serious difficulties if its internal transfer-pricing policies were vigorously attacked by the US Govt or by the IRS, and large tax bills arose as a result. The same goes for any company that might conceivably find itself pursued someday for anti-competitive or "abusive monopoly" practices).

To return to the substantive issue, as it were, I don't think it is fair to castigate the Revenue for doing their job in enforcing tax collection. If the Revenue were precluded from acting  every time someone cries "this will cause job losees", they would never collect a cent. However I do think there is a serious problem inherent in the excessive interest charges that are specified in legislation and which the Revenue are legally obliged to enforce. 

When this problem is interwoven with the issue of some tax enforcement measures taking years, if not decades to materialise, this leads to a very undesirable situation where the application of usurous interest rates to originally small liabilities can turn, in the space of anything more than a few years, to massive settlement bills.  The sad thing is that the authorities have absolutely no power to waive or reduce the interest bill even when there is genuine hardship or injustice to the taxpayer (eg in cases of inadvertent tax default)

There is a simple solution to all this. Reform the statutory interest rates chargeable by Revenue to levels approximating those charged by banks on commercial loans. If you wish, increase the penalties element of tax settlements accordingly. In this scenario the liability of the deliberate tax defaulter remains the same but at least Revenue have some discretion to mitigate comparitively innocent cases.


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## rainyday (26 Nov 2004)

*Re: a tactic*

Hi Tommy - I disagree with some of your comments about boardroom skullduggery. Arthur Anderson had 100's if not 1000's of accountants working on Enron, many of whom had visibility to the flawed corporate structure. It was not a case of boardroom skulduggery with the secrets being whispered by the chosen few - Anderson's were well known as having an extremely aggressive culture in all aspects of their business. It was no surprise to anyone in industry that Anderson was the one of the big five firms to be caught (though I know the other firms have had their own sins too, albeit on a smaller scale). Indeed I declined a call from a recruitment agency in relation to Anderson Consulting many years ago, because of what I knew about their culture. A past employer had a dispute with Revenue over VAT classification of one major product line. This wasn't a deep secret whispered in the boardroom, but an open business issue, discussed with all staff. I don't see the relevance of the Equitable Life example, as I understood this was simply a matter of flawed business judgement, not tax evasion. My current employer has had their own run-ins with the authorities, though not on VAT matters. I reasearched these issues at the time that I was considering the job offer, and got views for current & past employees before making my own decision. Is it possible that I'll be proved wrong somewhere down the line? Yes - it is possible. Is it likely? IMHO, No.

But again, I think the focus is being mis-directed - as if the State has a duty to make it easy for some to take calculated decisions to break the law. I find it hard to believe that cases of genuinely 'inadvertant' tax default are a big issue. Surely such cases are a tiny minority? In what kind of circumstances could one evade tax inadvertantly?

I wouldn't disagree with your proposal to reduce the mandatory interest and increase the penalties if I had full trust in a fair application of these penalties - From what I've seen of some high-profile cases (Haughey et al), I don't have this trust today.


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## XXXAnother PersonXXX (26 Nov 2004)

*Re: a tactic*



> In the example you give, Revenue is not the cause of the company collapse. The cause of the collapse is poor cashflow planning. If everyone knows that the councils etc are slow payers, then they need to plan for these in advance. If it is not possible to manage such business in a profitable manner, then walk away - Don't take on the business if it is going to drive you under.



Business owners generally don't know such things in advance! Do you think slow payers advertise the fact?

Your comment about turning away business astounds me.


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## WizardDr (26 Nov 2004)

*back to basics..*

My concerns at the start..

1. Revenue taking action 16 years or more after they 'created' the problem;
2. No accountability from Revnue as to what they did or did not do to address the problem and even simplify it;
3. People here sometimes thinking that tax evasion only applies to 'wealthy' people when the whole nation was at it;
4. Revenue being terribly selective with what they go after;
5. Revenue deliberately misleadinh the Oireachtais about powers that had for years;
6. Hugely complex Finance Acts;

and it goes on.


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## rainyday (26 Nov 2004)

*Re: back to basics..*



> Revenue taking action 16 years or more after they 'created' the problem


They didn't create the problem. The evaders created the problem.



> Business owners generally don't know such things in advance! Do you think slow payers advertise the fact?


Jem tells us that everyone knows that the county councils are slow payers, but all the small business are then surprised when they don't get paid on time by the councils. Now that's astounding! Don't they read their SFA bulletins or speak to their accountants first? 


> Your comment about turning away business astounds me.


Why? Grabbing business that risks driving your business into ruin would be astounding.


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## darag (26 Nov 2004)

*Re: back to basics..*

i think tax evasion is a very serious offence as it's effectively a form of robbery and i'm scrupulous (i hope) about declaring everything.  however, there is something very flawed about revenue's actions.  i disagree with rainyday's point, which is (simplifying greatly) that because the evaders were doing wrong, that revenue shouldn't be criticised for way they're punishing them.  laws which are not enforced lose some of their legitimacy.  it'd be like if there was a stretch of road with "no parking" signs on it but that's always full of parked cars and the guards never do anything about it.  i hardly think it would be fair 10 or 15 years later, if the guards started searching for old photographs of the street to track down the parking offenders and slap huge punitive fines on them; yes they shouldn't have been parking there but everyone else was doing it while the guards seemed to be turning a blind eye;  that wouldn't seem like justice to me.

also there's undoubtedly a populist element to revenue's targets.  i can't see them going after the very widespread evasion associated with credit union dividends or them chasing teachers for declaring grind money or targeting the common (from my own anecdotal experience) non-declaration of bik among paye workers.


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## Tommy (26 Nov 2004)

*Re: back to basics..*

Hi Rainyday

Andersen's downfall as a result of the Enron scandal had nothing to do with tax evasion (except perhaps in a minutely tangential way). I don't see their difficulties as being much different than those of Equitable Life. The partners and staff of Andersen in this country had no knowledge of the shoddy and ultimately stupid auditing practices of their counterparts in the US - otherwise they hardly would have risked their capital and livelihoods in such a risky venture? 



> I find it hard to believe that cases of genuinely 'inadvertant' tax default are a big issue. Surely such cases are a tiny minority? In what kind of circumstances could one evade tax inadvertantly?


There are plenty of cases in which tax defaults can arise as a result of error - mainly to do with errors in misinterpreting tax laws and in failing to follow guidelines to the letter. You can "tut tut" as long as you wish on this score but you only need to read AAM for a short while to understand the depth of confusion and misunderstanding that can arise among genuinely compliant people about their tax obligations. Obviously professional advise can be sought to minimise the risk of inadvertant defaults. However it is not possible for most businesses (esp small firms) to have professionals at hand all the time and even the best professionals in the world can occasionally make mistakes when dealing with complex matters even without ever being negligent in any way. Btw it is not unknown for tax inspectors and enforcement officers to make similiar errors in interpreting and implementing tax rules - except that they dont face any serious consequences when they do err.



> I wouldn't disagree with your proposal to reduce the mandatory interest and increase the penalties if I had full trust in a fair application of these penalties - From what I've seen of some high-profile cases (Haughey et al), I don't have this trust today.



So it is okay to have ridiculously unjust laws in force, adversely affecting significant numbers of people, just to punish a couple of big fish? Would you use this argument to defend capital punishment?


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## jem (26 Nov 2004)

*Re: back to basics..*



> Jem tells us that everyone knows that the county councils are slow payers, but all the small business are then surprised when they don't get paid on time by the councils.


First of all they are not ment to be and if you charge them interest as yopu can, then you will not get any more work from them.


> Don't they read their SFA bulletins or speak to their accountants first?


many, many small businesses are not members of sfa, in fact to a large extent it is well named.And no very few people would talk to their accountants before they took on a sat building an extension to a council house for example.
Rainyday there is a big bad world out there, outside the large companies, where people take big risks,where they do their best to keep their employees paid and keep the banks somewhat happy. Where people do not get paid at all no less on time. From talking to clients there is loads of business available in all sectors , just one problem , no money changing hands, debtors going up and up. The bigest reason for small businesses going burst is not lack of business it is cashflow.


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## rainyday (27 Nov 2004)

*Re: back to basics..*

Hi Tommy - I'm not sure I get your point about the Andersen partners re. Enron. If you don't expect that the Irish partners would risk their livelihood, how come the US partners were greedy enough to risk their livelihoods?

Yes, I understand that even the  from time to time. However, I've never heard of cases where the end result of such errors was significant enough to put the company under after years of Revenue inactivity. 



> Would you use this argument to defend capital punishment?


Great idea - Capital punishment for tax evaders. Now why didn't I think of that.

Hi Jem - My SFA comment was slightly tongue-in-cheek. But the general point is relevant - Don't they talk with their suppliers & their customers & their mates in the pub about 'hows business'. I can't get my head around the slow-paying being a huge surprise at the end of the day. It seems that everyone knows about it, but no-one is prepared to plan ahead to manage the risk.

If these guys want to take big risks, fair play to them - but don't expect the Revenue (i.e. you & me) to bail them out with cheap credit when the risk doesn't pay off.


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## XXXAnother PersonXXX (29 Nov 2004)

*Re: back to basics..*

*It seems that everyone knows about it, but no-one is prepared to plan ahead to manage the risk.*

How would you do this? How can you 'plan ahead' when you don't know when you're going to get paid? ,Or even IF you're going to get paid?

If the company you're working for took that attitude with your wages, would you be able to plan ahead? If they said to you, we might pay you next month, or we might not, would you have a contingency in place? Now throw a highly aggressive revenue into the mix.


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## rainyday (29 Nov 2004)

*Re: back to basics..*



> How would you do this? How can you 'plan ahead' when you don't know when you're going to get paid? ,Or even IF you're going to get paid?


Here's how you plan. If you don't know IF you're going to get paid, then don't take on the business. Or look for cash up-front? If you don't know WHEN you are going to get paid, then build the cost of borrowing the cash until you get paid into your costs to take on the job.

Here's how most SME's plan - Ah sure we'll just hold off on the Revenue for a few months and let the state become our bankers.

Which one do you prefer?


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## XXXAnother PersonXXX (30 Nov 2004)

*Re: back to basics..*

I prefer option two. People don't lose their jobs with option two, when the SME has gone bust.

Your 'plan' won't work for 90+% of cases because you don't know in advance if someone is going to be late paying. That means you won't be taking on 90+% of your work. You won't be able to build up a fund to cover such cases, because you don't have the money to do this in the first place!


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## Tommy (30 Nov 2004)

*Re: back to basics..*



> Here's how most SME's plan - Ah sure we'll just hold off on the Revenue for a few months and let the state become our bankers.



What a pathetic and insulting generalisation. You obviously dont really have a clue of what your are talking about.


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## rainyday (30 Nov 2004)

*Re: back to basics..*

Oh lighten up Tommy. My tongue was firmly in my cheek. However, my exaggerated point was based on the views from you/Jem/AP on the difficulties for small businesses getting paid.

Hi AP - Just so I understand this fully, you are saying that many small businesses will fold if they are unable to defer Revenue bills in order to fund their cash-flow - right? And if so, are you happy as a taxpayer to provide this hidden subsidy to small businesses in this way?


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## XXXAnother PersonXXX (30 Nov 2004)

*Re: back to basics..*

*Hi AP - Just so I understand this fully, you are saying that many small businesses will fold if they are unable to defer Revenue bills in order to fund their cash-flow - right? And if so, are you happy as a taxpayer to provide this hidden subsidy to small businesses in this way?*

I'm not subsidising anyone! - Small businesses get heavily penalised by the revenue for late payments.

However, I'd gladly shoulder the burden if this wasn't the case. I'd rather people be employed, and getting paid by small companies than for me to have to pay their unemployment benefit.


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## Tommy (30 Nov 2004)

*Re: back to basics..*

Sometimes it is hard to tell on these pages which views are meant to be ironic and which are meant to be serious. It definitely appears from your posts that you have some sort of a bias against business in general and small business in particular and I read your comment above in that light. It seems to me that every time you are pulled up on a point in this thread (concerning as it does issues that you appear to know very little about) you claim that your remarks were "tongue in cheek" Convenient, eh?

BTW, I never expressed any views on this thread about the difficulties of small businesses getting paid. I did make the point above that if the Revenue were precluded from acting every time someone cries "this will cause job losses", they would never collect a cent.


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## rainyday (30 Nov 2004)

*Re: back to basics..*

We have got so far from the original issue on this thread that I'm now thoroughly confused how we got here and what the hell we are talking about. So let me sumarise my views - you can take em or leave em.

1) Blaming Revenue for delays on addressing tax evasion is like  - It is ignoring the root cause to treat a symptom. The cause of tax evasion is tax evaders.

2) I have no bias against business in general and small business in particular. I have a bias against any business or individual who defers Revenue debts to subsidise their cashflow.

3) I know very little about small business. I was simply going on the assertions of Jem & others that small businesses typically don't have any idea when they are going to get paid when they take on a particular order. If this is not the case, I'll be glad to be corrected by others.


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## Tommy (30 Nov 2004)

*Re: back to basics..*



> I was simply going on the assertions of Jem & others that small businesses typically don't have any idea when they are going to get paid when they take on a particular order.



Hi Rainyday

By the way the above assertion is, in the large majority of cases, 100% correct. Unless a small business is in a particularly strong position in their market, they are rarely able to dictate cast-iron credit terms to customers. Even when they are, it is not unknown for customers to default on agreed payment arrangements. In that scenario, there is little that the business can do in the short-term to enforce payment. 

The above is a matter of fact and would be well known to anyone with a smidgin of knowledge as to how small business works in this country. It is not to say that businesses do not have a moral, legal and business obligation to pay their wages, their tax bills, their finance committments, and their own creditors as they fall due.  However misfortunes do happen from time to time, people get let down in this process (including the Revenue) and sometimes businesses go to the wall, employees lose their jobs  and everyone involved (including the Revenue) loses some or all of the money they are due. Not an ideal world but thats life...


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## rainyday (30 Nov 2004)

*Re: back to basics..*

Hi Tommy - That makes perfect sense. The one open issue for is how frequently 'from time to time' occurs. I can understand that exceptional cases will arise occasionaly. However, the picture painted by Jem/AP was of SMEs frequently & consistently taking on business with no real idea of when they are going to get paid. I just doesn't make sense to me that this would be the case. In particular, SMEs have an obligation when taking on new customers or large new contracts to do 'due dilligence' to ensure that they have a good chance of getting paid within a known time period.


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## Tommy (30 Nov 2004)

*Re: back to basics..*



> However, the picture painted by Jem/AP was of SMEs frequently & consistently taking on business with no real idea of when they are going to get paid. I just doesn't make sense to me that this would be the case.



It mightn't make sense to you but it is believe me it is 100% fact. The best that a small business person can normally do is to try to suss out some information from personal contacts as to the integrity (ie the credit worthiness) of their customer, in advance of either taking on the assignment or completing the work to a certain stage where they would be badly exposed if things go wrong. Obviously if they hear something alarming they can take appropriate action but otherwise they have little option but use their gut instinct and operate on the basis of trust from there on. 

(This obviously doesnt apply to contractors who are supplying to the likes of Intel or the big plcs but most small businesses dont have that luxury.)

Its easy to apply "best practice" theory in saying how small business "should" operate but the reality is that the real world is different and the "law of the jungle" unfortunately applies. I dont mean to be smart in saying this but the notion of a small tradesman or merchant doing "due diligence" on their customers is laughable.

ps If you don't believe me, read any book on small business or entrepreneurship. [broken link removed] by Yanky fachler is a good introduction.


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## rainyday (30 Nov 2004)

*Re: back to basics..*



> It mightn't make sense to you but it is believe me it is 100% fact. The best that a small business person can normally do is to try to suss out some information from personal contacts as to the integrity (ie the credit worthiness) of their customer, in advance of either taking on the assignment or completing the work to a certain stage where they would be badly exposed if things go wrong. Obviously if they hear something alarming they can take appropriate action but otherwise they have little option but use their gut instinct and operate on the basis of trust from there on.


And presumably they take this risk into account when deciding whether to take the business or not?


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## XXXAnother PersonXXX (1 Dec 2004)

*Re: back to basics..*

*deciding whether to take the business*

I'm not sure about other small companies, but 'Deciding to take the business' doesn't enter into it with our company. We take the business, or our competitors will.

It simply costs too much to acquire new customers to turn business away like that.

Maybe larger companies have such luxury.


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## rainyday (1 Dec 2004)

*Re: back to basics..*

It's not a question of luxury - If taking the business is going to drive you out of business as a result of not getting paid for a long period, then it makes perfect sense to pass on the offer and let your competitor go under? Why would you do otherwise?

Unless of course, the risk of not getting paid is actually quite small?


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## XXXAnother PersonXXX (1 Dec 2004)

*Re: back to basics..*

*If taking the business is going to drive you out of business as a result of not getting paid for a long period, then it makes perfect sense to pass on the offer and let your competitor go under? Why would you do otherwise?*

You generally don't know at the time that you are not going to be paid, or be paid late. Why would anyone do work if they knew they were not going to be paid?

*Unless of course, the risk of not getting paid is actually quite small?*

We've not been paid a few times. We did the legal proceedings on one occasion, but it took over 3 years, and at the end, the money recovered was just enough to pay our solicitor. We didn't get anything.

In summary:
- Small businesses don't know in advance that they are either not going to be paid, or be paid late.

- If someone offers a small business custom, the small business will generally take the custom. Most small companies don't have the luxury of picking and choosing.

- Given the choice of deferring a revenue bill, or going bust, it's generally better to defer the revenue bill. (Unless of course the business is going under anyway)

- If someone decides not to pay, there is little practical recourse.


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## rainyday (1 Dec 2004)

*Re: back to basics..*

I think this discussion is indicating that not be paid is the exception, not the rule.


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## Tommy (9 Dec 2004)

*Re: back to basics..*



> I disagree with some of your comments about boardroom skullduggery. Arthur Anderson had 100's if not 1000's of accountants working on Enron, many of whom had visibility to the flawed corporate structure. It was not a case of boardroom skulduggery with the secrets being whispered by the chosen few - Anderson's were well known as having an extremely aggressive culture in all aspects of their business..... Indeed I declined a call from a recruitment agency in relation to Anderson Consulting many years ago, because of what I knew about their culture.



Hi Rainyday

I was kind of intrigued by your comments above regarding Arthur Andersen and Accenture (formerly Andersen Consulting). I wasn't aware of any business problems within Accenture and certainly a quick glance at www.accenture.com seems to indicate that Accenture remains a thriving company despite the collapse of Arthur Andersen. Btw, the Irish Revenue had enough confidence in Accenture to award them the contract for the development of their ROS system. I very much doubt that they would have won this highly sensitive contract had there been any question marks hanging over the company, or indeed their "culture".


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## daltonr (9 Dec 2004)

*Re: back to basics..*



> Indeed I declined a call from a recruitment agency in relation to Anderson Consulting many years ago, because of what I knew about their culture.



I took the call and went to the interview despite repeatedly telling the Recuiter that I wasn't interested in a permanent role.  I also told the interviewers (on all three interviews) that I wasn't interested in a permanent role.

They were shocked when I eventually declined a permanent role!!!  I spent half an hour on the phone trying to convince them that I knew what I was doing.

I found one of the interviewers in particular to be very arrogant.

When he asked me how much I'd expect to earn, I told him my then daily rate, (which was good, but not excessive).
His response was:

"My heart bleeds for you"

-Rd


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## extopia (10 Dec 2004)

*Re: back to basics..*

Jeez guys, listen to yourselves...

Arthur Anderson was trying to suck ye all in but ye all had the great wisdom and foresight to decline their advances, sometimes after up to three long interviews. And when was this exactly? And who else was hiring at the time?

Will ye ever get up the yard?!


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## rainyday (10 Dec 2004)

*Re: back to basics..*

Hi Tommy - My comments refer back to the Andersen Consulting days of the late 1990's, when they were part of AA (predating Accenture). They were reknowned in the industry for their aggressive attitude to everything - aggressive recruiting, aggressive training (their bootcamp for new recruits in Chicago was legendary), their aggressive attitude to grabbing business regardless of their ability to staff/deliver that business), their nickname of 'the Androids' referring to their tendancy to march on site with hordes of junior droid-like consultants who did thinks the Andersen way, by the book, with no independent thought or judgement involved. I'm sure there is a bit of exaggeration and competitive envy built into these stories, but nevertheless, that was their reputation in the marketplace. When the whole Enron thing came out years later, it didn't hugely surprise me.


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