In a letter from NAMA to the Public Accounts Committee (PAC) earlier this week, an underpayment of VAT was disclosed, and it was confirmed that the agency was hit with charges for breaking the rules. The payment came about after an unprompted voluntary disclosure by NAMA to Revenue in 2018.
“The unprompted voluntary disclosure primarily related to underpayments of VAT on certain services received by National Asset Loan Management DAC (NALM) in respect of NAMA-secured assets located abroad, where invoices were settled directly by debtors or their lawyers,” the letter, seen by the Examiner’s Daniel McConnell, stated.
NAMA told the PAC that invoices were settled directly at source by debtors or their lawyers and, as a result, were not subject to Nama’s normal direct-payment process.
In 2017, Nama identified an invoice that was settled at source by a debtor, but should have attracted a reverse-charge obligation. Consequently, an underpayment of VAT arose.
NAMA said that it “immediately initiated a detailed review” of invoices for services received by NALM from abroad, and not processed by the NAMA accounts-payable function.
The agency said that the review, which took a number of months to complete, identified and collated all relevant invoices that were not paid through NAMA’s accounts payable system. The VAT that should have been paid on these invoices was quantified, and included in the voluntary disclosure.
As part of this review, a payment of €1.9 million was made to Revenue, of which €600,000 was in respect of interest and penalties. The agency said that the voluntary disclosure was not financially material in the context of the overall NAMA group corporation tax of €113 million in 2018.
NAMA insists that it is committed to the highest standards of tax governance and seeks to ensure that it is fully compliant with Irish tax legislation.
The disclosure was sent to Revenue on 18 October last year. The Comptroller and Auditor General was notified of the existence of the disclosure during the course of NAMA’s 2018 year-end audit.
Following the submission of the disclosure, the Revenue Commissioners confirmed that they were satisfied with the content of the unprompted voluntary disclosure, the work performed by NAMA to identify it, and the background information provided.
The letter confirming acceptance of the settlement amount was received from Revenue on 21 March.
NAMA has claimed that its internal control procedures have been enhanced in order to ensure that a similar situation does not arise in the future.