The Minister for Finance Brian Lenihan has been called upon to reduce the rates of interest charged for late payment of tax bills, due to the recession.
The Irish Taxation Institute, which represents over 6,000 tax consultants, accountants, barristers and solicitors, said the 'punitive' rates currently being charged are unsustainable in the current climate could exacerbate the difficulties faced by small and medium-sized firms.
“For some SMEs, it’s not that they can’t pay their tax liabilities, it’s that they can’t pay right now. There’s no logic in punishing these businesses further by imposing punitive interest rates when they are already struggling to stay on top of tax payments, especially when those rates are wildly out of line with the current commercial lending rates," said Jim Ryan, president of the Irish Taxation Institute.
"In the long term, it is in the exchequer’s interest to adopt a flexible approach to viable businesses rather than forcing their early closure because they can’t meet tax deadlines in the current environment. There are separate punitive rates for non payment of tax through negligence and these should remain in place," he added.
Depending on the tax, annualised interest of 10 per cent to 12 per cent is applied for late payment of tax bills. The equivalent interest rates in the UK are 2 per cent to 3.5 per cent.
In its letter to the Minister for Finance, the Irish Taxation Institute also called for the introduction off a Tax Payment Support service for businesses similar to that recently introduced in the UK.
