Revenue Bill: Dept. Expenditure €700K Payroll Error
Department of Public Expenditure Faces €700,000 Bill Over tax Deduction Errors
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The Department of Public Expenditure and Reform is facing approximately €700,000 in interest payments to the Revenue Commissioners due to delays and inaccuracies in its tax deductions related to high-value public service pensions. The issue, highlighted by the Public Accounts Committee (PAC), has raised questions about the department’s oversight of public-sector efficiency, given its role in holding other government departments accountable for their spending.
Errors in High-Value pension Tax Deductions
The core of the problem lies in the handling of tax deductions from retirement benefits of former public service staff whose pensions exceed €2 million. In these cases, the tax liability is initially covered by the pension administrator, with the funds recouped through reduced pension payments over a 20-year period.
A review conducted by the Comptroller and Auditor General, Seamus McCarthy, between 2015 and 2023 examined approximately 20 cases. The review revealed that while deductions were correctly applied to pensions in all instances, the actual remittance of these funds to the Revenue Commissioners occurred in only six cases. This resulted in roughly €2.3 million remaining unremitted on the department’s books.
Revenue Audit Uncovers Further Issues
A subsequent audit by the Revenue Commissioners this year identified additional discrepancies in the taxation of high-value pensions. Bernie Kelly, chief executive of the National Shared Service Office, informed the PAC that a review pinpointed 23 cases where Chargeable Excess Tax (CET) was incorrectly calculated. Of these, 19 cases have been validated, creating a total liability of €1.4 million.
This incorrect CET calculation is expected to trigger approximately €230,000 in interest payments. Combined with earlier interest payments of over €468,744 relating to the cases where tax was correctly deducted but not forwarded to Revenue, the total interest bill for the Department of Public Expenditure is nearing €700,000.
PAC Questions and Department response
Members of the Dáil’s Public Accounts Committee pressed officials on whether the situation was “embarrassing” for a department tasked with ensuring public-sector efficiency. Fine Gael TD James Geoghegan specifically questioned whether it was problematic for the Department of Public Expenditure to be making late tax payments to Revenue while simultaneously scrutinizing other departments’ spending.
David Moloney, Secretary General of the Department of Public Expenditure, acknowledged the errors and stated he was “not happy about the situation.” he emphasized the department’s commitment to accurate payments and indicated that any further penalties beyond the accrued interest would be at the discretion of the Revenue Commissioners.
The department is currently working to rectify the issues and ensure full compliance with tax regulations. The incident underscores the importance of robust internal controls and timely remittance of funds, even within departments responsible for financial oversight.