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Revenue pays back €2m to pensioners in tax credits debacle

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Revenue Commissioner Josephine Feehily. Photo: PA

Revenue Commissioner Josephine Feehily. Photo: PA

Revenue Commissioner Josephine Feehily. Photo: PA

THE taxman had to pay back around €2m to 7,000 retired people after 115,000 had been originally targeted in the controversial clampdown on pensioner incomes.

It has emerged that the 7,000 pensioners were paying too much tax, not too little as authorities had believed.

The Revenue now thinks around one in 10 of the cases originally identified are also exempt from further taxes.

However, authorities still expect to take in €45m a year as a result of the initiative.

Details of the latest stumbling block in the scheme emerged when the Revenue Commissioners published their 2011 annual report yesterday.

The Commissioners' annual report said the overall tax take for 2011 was up 7.3pc to €34bn -- the first increase after three years of falling income.

Controversial

However, the plan to increase the amount being brought in from pensioners has been massively controversial.

In January the authorities sent out a mass mailout to 115,000 pensioners alerting them that they could be liable for bigger bills.

Tax officials said they had identified a number of retired people with second pensions that the taxman knew nothing about. It meant their tax credits had been wrongly calculated for years.

But it became a public relations disaster, and officials later apologised for the manner in which the letters were sent out.

Yesterday the chairwoman of the Revenue Commissioner, Josephine Feehily, confirmed there had been refunds of about €2m paid out as a result of some tax bills being reassessed.

However, she also said that there was a core of people that Revenue was targeting with another round of letters.

She said 2,500 cases have been identified where people are making €50,000 a year on top of their state pension. Some 1,700 of those have now been targeted with a second round of letters, asking them to "self-review" their tax position within 30 days.

"We expect many in that group to pay an extra €2,000 to €3,000 per year," Ms Feehily said.

The overall picture provided by yesterday's annual report was more upbeat.

The overall tax take in 2011 increased by 7.3pc to €34.2bn, reversing three years of falling returns to the Exchequer.

Despite the better returns, the tax take comes in under the budget target by €831m. And the economic crisis is still hitting the tax take, with €243m described as uncollectable as a result of company closures.

The number of individuals and businesses struggling to pay taxes increased by 8pc last year and there were 16,000 cases of debt rescheduling in 2011.

There are now twice as many of restructurings as in 2007.

A clampdown on fuel smuggling saw Revenue close 32 petrol stations last year, and 11 so far in 2012. There were 109 million illegal cigarettes seized last year and 1,000 convictions for not filing income tax returns.

The tax authorities also plan to launch a system of on-the-spot fines of up to €4,000 in cases where employers have people working who are not on the books.

Irish Independent