Revenue - 16 years and counting

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.
 
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.
 
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.
 
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.
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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.
 
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.
 
Re: back to basics..

Revenue taking action 16 years or more after they 'created' the problem
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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?
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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.
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Why? Grabbing business that risks driving your business into ruin would be astounding.
 
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.
 
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?
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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.
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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?
 
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.
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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?
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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.
 
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?
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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.
 
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.
 
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?
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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?
 
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!
 
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.
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What a pathetic and insulting generalisation. You obviously dont really have a clue of what your are talking about.
 
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?
 
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.
 
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.
 
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.
 
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.
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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...
 
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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