If you want a tax refund, don't be self-employed. Instead be a corporation and double your chance of receiving a repayment. Surprisingly, a self-employed person has only a 41 per cent chance of receiving a refund within 20 (working) days. In contrast, the finance director of a corporation has a 78 per cent chance, according to the Revenue Commissioners' annual report for 2000.
The disparity is surprising because the tax inspectors have set the same customer service standard for each category. That standard is for 80 per cent of refunds to be made within 20 days. The self-employed fare better over the longer 40-day period with 74 per cent getting refunds; that is still well below the 97 per cent by corporations.
The cynic could argue that there is a bias in favour of corporations. Why else has the period of repayment for corporations either remained the same, or improved, over the past two years, while the period has lengthened for the self-employed? Indeed, the service has also worsened for the PAYE taxpayer over the last three years (2000 - 62 per cent, 1999 - 63 per cent, 1998 - 76 per cent, within 10 days).
The report explains: "unfortunately, for a variety of reasons, such as increases in volumes of business, and legislative, administrative and technological changes, not all of the published standards have been met."
And "we remain fully committed to the ongoing development of the quality of our service delivery and we will continue to review our practices and procedures to achieve those targets we are not yet meeting and to improve others further". According to the Revenue Commissioners' own criteria, the standards of service vary considerably, from a low of 32 per cent to the maximum 100 per cent. A snippet shows some of the performances.
Correspondence: the Revenue's standard was to reply to 100 per cent of routine matters within 20 days. The result was 89 per cent, better than the 81 per cent in 1999, but below the 96 per cent achieved in 1998. All complex correspondence was to be replied to within 30 days. The outcome was 93 per cent, close to the 94 per cent in 1999 but well up on the 86 per cent in 1998.
Processing of VAT repayments: the standard was to have 85 per cent refunded within 10 days and 100 per cent within 30 days. The result was 81 per cent refunding within 10 days, which was a consistent performance with other years. Over the longer period, 96 per cent was refunded, an improvement on 1999 and well up on 1998.
Processing income tax returns: here the standard varied between 90 per cent and 100 per cent, and the performance, depending on the date the return was received, varied between 57 per cent and 100 per cent.
Processing of corporation tax returns: the standard was to have 90 per cent processed within 20 days and 100 per cent within 30 per days. Some 83 per cent was processed in the shorter period and 95 per cent within 30 days. Both results were an improvement on previous years.
Stamp Duty (adjudication and straight stamping, and companies): here the standard was 100 per cent and this was achieved in all categories with the exception of the category "received by post processed within 20 working days" with a result of 32 per cent.
Stamp Duty - Crest: the standard was 90 per cent refunded within 10 days and 100 per cent within 30 days. The result at 74 per cent within 10 days was much better than in 1999, but the 91 per cent achieved for the longer period was lower than in 1999.
Residential Property Tax: All the clearance certificates were to be processed within five days. The inspectors achieved their target.
Capital Acquisition Tax: gift/ inheritance and discretionary trust tax. The standard was for 40 per cent to be processed within five days and 70 per cent within 10 days. Here 25 per cent was processed over a week while 50 per cent was processed over the longer period.
It is obvious that the tax inspectors have had to deal with a substantial amount of extra work due to the strong upsurge in economic growth. Reflecting this, the number of traders registered for VAT increased by 10 per cent, while the value of net tax collection rose by 18 per cent. And follow-up action on DIRT and the Ansbacher account holders, has put a considerable strain on the system.
Its efficiency could be judged on the cost of administration, as a percentage of gross receipts. This has been a positive trend, falling from 1.26 per cent in 1995 to 0.81 per cent last year. Also, arrears as a percentage of taxes collected are static at 6 per cent but considerably down on the 1980s when they reached 57 per cent.
While the main focus of the report has naturally been on the collection of taxes and the pursuit of defaulters, the most important issue for most taxpayers - and these are the compliant taxpayers - is how quickly, and efficiently, the Revenue deals with tax returns, correspondence and refunds.
The public face of the Revenue has improved considerably over recent years: tax inspectors are now visible and helpful, and the organisation provides a more critical examination of itself than many other State bodies.
But its effectiveness will be judged by the standards it has set for itself; these standards are rarely met and, in some cases, particularly in refunds for the PAYE and self-employed taxpayers, the service has disimproved. That needs to be rectified.
- Bill Murdoch's column appears on the first Friday of every month
