Revenue eBrief No. 192/23

Procedures for requiring security from taxable persons

Section 99 of the Value Added Tax Consolidation Act 2010 (VATCA 2010) allows Revenue to require a trader to submit security in certain circumstances where a VAT refund has been claimed. Section 109 of VATCA 2010 allows Revenue to require a trader to submit security for any VAT that might become due, where Revenue feels that this is needed to protect its interest.  

Tax and Duty Manual Procedures for requiring security from taxable persons provides information for taxpayers where Revenue has requested the submission of security.

EXTRACT:

1 Introduction/Background

Section 99 of the Value Added Tax Consolidation Act 2010 (VATCA 2010) allows Revenue to require a trader to submit security in certain circumstances where a refund has been claimed. Section 109 of VATCA 2010 allows Revenue to require a trader to submit security for any VAT that might become due, where Revenue feels that this is needed to protect its interest. The legislation allows Revenue to require security in two distinct scenarios:

• Security under section 99 (3)(a) VATCA 2010 –this can be required where a trader submits a claim for a VAT refund. Where there are grounds to believe that VAT will not be paid on future supplies based on the previous compliance history of the trader and/or principals/directors of the company, security to the value of that refund should be sought before the refund is made. The amount of the security required cannot
  exceed the amount of the VAT refund claimed.

• Security under section 109 VATCA 2010 – this can be required at point of registration or at any stage during the lifecycle of the business. VAT Bonds should be sought in cases where it is clear that such action is necessary for the protection of Revenue. Obvious examples are (a) phoenix cases where liabilities were left unpaid previously or (b) new traders setting up businesses to trade in products known to be prominent in carousel fraud chains.