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$250 million owed to IRD

As taxpayers anxiously await payment of their overdue income tax returns, a new report has pointed to a quarter of a billion dollars in outstanding tax payments due to the Inland Revenue Department (IRD) for financial year 2011-2012 and 2013-2014.

Overall, the IRD Government was expected to collect $2.1 billion in cash over the two-year period.

However, up until March 31 last year, $250 million of that amount was still outstanding, according to the latest Auditor General’s report.

In it, Government’s chief auditor Leigh Trotman also lamented that while warning letters had been sent to taxpayers with outstanding balances indicating that “failure to comply with the request to settle arrears would result in the Department taking legal action or initiating other compulsory action as required by Section 72 of the Income Tax Act”, there was no evidence that any such action was actually taken during the period under review.

Auditor General Leigh Trotman

Auditor General Leigh Trotman

“Hence, there would be no urgency by the taxpayer in the settlement of accounts since the Department did not take action to enforce the measures outlined in the letters,” the Auditor General said.

He further revealed that there was also no evidence provided to indicate that Unpaid Tax Certificates were filed in the law courts against those taxpayers who had refused to pay or those who had reneged on any payment plans agreed with the Department. Neither was information provided on the number of garnishments enforced by the Department, which was recently absorbed into the Barbados Revenue Authority (BRA).

And, just as is the case with the Value Added Tax Department, which also now falls under the BRA umbrella, the Auditor General pointed out that while revenues were declining, accounts receivable were increasing.

Furthermore, there was no assessment of the amount collected in receivables, the cost incurred for specific interventions, or how long an action took – information, which the Auditor General said “could have assisted in better targeting of taxpayers who were delinquent and generally a better utilization of resources”.

In his 209-page report, Trotman also raised concern that the value of the accounts receivable reported in the Government’s Consolidated Financial Statements did not reconcile with the figures in the IRD’s electronic tax system and therefore could not be relied upon.

“It should be noted that the inability of the Audit Office in verifying these balances has impacted on the opinion given on the Government’s Consolidated Financial Statements for financial years 2010-2011 to 2012-2013,” the Auditor General said.

He noted that in financial year 2013-2014, Government had collected tax revenue of $634.4 million from the IRD, representing 27 per cent of the total revenues to the State.

“It should be noted that the Government has recorded declining revenues from taxes collected by the Inland Revenue

Department over the last three years,” the official added.

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