Callinan faces quiz on Garda taxes bill
Calls for Commissioner to 'correct record' on €12.5m Revenue error
AN Garda Siochana has paid a €12.5m bill from the Revenue Commissioners for unpaid taxes, penalties and interest, for being in breach of tax law.
The highly embarrassing affair came about after Revenue tax inspectors determined that allowances paid to all 13,000 members of the force between 2009 and 2011 should have been subject to tax, but they weren't.
The full details of the extraordinary settlement are contained in documents from Garda Commissioner Martin Callinan to the Public Accounts Committee (PAC), obtained by the Sunday Independent and published today. The revelations come as the force is facing a €36m shortfall in its budget this year.
But it can also be revealed that Mr Callinan himself is under fire this weekend to explain to the PAC what appears to be a contradiction to his testimony to the committee last month, which is contained in the new documents.
Sean Fleming, PAC member, last night called on Mr Callinan to come back before the committee to publicly explain the discrepancy in order to "correct the record".
In a statement to the Sunday Independent yesterday, a spokesman for Mr Callinan said the reason he made his comments at the committee to the effect there were no penalties or interest payments was because some information was not available at the time.
"There is no discrepancy as the matter was fully clarified to the PAC in the correspondence. The amount of €12.5m represents a full and final settlement to Revenue and the taxable portion of the allowances were subject to PAYE/PRSI, USC and pension levy deductions for each garda member in receipt of the relevant allowance," the spokesman said.
Mr Callinan had previously communicated in May with the committee saying that neither penalties nor interest payments formed part of the settlement. However, the new documents, which provided the committee with updated information, show that out of the €12.5m settlement, €1.5m of it was made up of "penalties and interest payments".
Contained in the new documents are the details of investigations by tax inspectors in 2011, which led garda management to "make a declaration" in relation to allowances to their force members, which they believed to be "tax free".
The Sunday Independent can today reveal:
* Revenue Commissioners have found that tax-free allowances given to every member of the force were incorrectly applied.
* These allowances included boot allowances to all 13,084 force members, plainclothes allowances to 2,573 members, uniform maintenance allowances to 10,448 members, detective allowances to 1,775 members, juvenile liaison officer allowances to 118 members and a community crime prevention allowance to 38 members.
* The amounts in question were €4.6m in 2009, €4.2m in 2010 and €3.6m in 2011. The interest bill was €701,174 in 2009 and €335,295 in 2010, and the penalties imposed in 2009 were €213,462, €112,264 in 2010 and €107,687 in 2011.
* Despite the long-standing absence of tax liability on the allowances, Revenue only sought to penalise gardai for the years 2009 to 2012.
* Rank-and-file gardai have been made liable to pay that portion of the allowance now determined to be taxable by Revenue.
Mr Fleming has said the "highly embarrassing affair" was the result of "mal-administration" by garda management.
"Any allowance like these need Revenue approval. They paid these allowances over several years without Revenue approval. This is truly extraordinary," Mr Fleming said.
But he also criticised Mr Callinan for providing inaccurate information and for not taking the opportunity of his letter to the committee to clarify and apologise for his earlier incorrect statements on the interest and penalties.
"He had an opportunity to correct the record and he didn't take it. I am certainly insisting he comes back before the committee," Mr Fleming told the Sunday Independent.
The Revenue Commissioners said it "cannot comment on the tax affairs of an individual or an organisation".
Previously, Mr Callinan has communicated to the committee that there was no penalties or interest included in the settlement figure.
"No, that was a once-off payment," he said.
"The inspectors referred to are tax inspectors. They took the view that they would assess us in those years and that was the outcome of the discussion.
"They investigated for those three years and computed that figure, which we settled on subsequently."
When it was put to him that anyone else would be caught for interest and penalties, Mr Callinan said: "I am grateful they did not."
The allowances, he said, had "successfully been negotiated over time" and were considered tax free but the "Revenue took the view we should be paying tax on them".
The revelations come on the week that Mr Callinan's two-year term extension as Commissioner was approved by the Cabinet.
Mr Callinan recently said that he needs an injection of €36m before the end of December to ensure that his force can "break even" financially. Senior gardai have suggested that the strength of the force would have to be slashed dramatically to make ends meet.
James Fitzsimons, tax consultant and chartered accountant, said since the downturn the Revenue Commissioners are doing considerably more trawling of systems and unearthing anomalies not previously identified.
He said he was shocked that the uniform allowance would be deemed taxable, but it could be down to "customs and practice" agreements that have fallen foul of Revenue.
Mr Fitzsimons added that instances of public bodies falling foul of the Revenue are extremely rare, and the last case he could remember was when the Revenue made a settlement with itself over Benefit in Kind allowances on staff with cars.