The first Exchequer return of 2014 is sharply down on the same month last year, due mainly to the switchover to a new electronic payments system across Europe's banks.

The Department of Finance has revealed it did not receive around €650 million to close the January account on Friday, a drop of about 17% compared with the same period last year.

The delay was caused by the implementation of the Single Euro Payment Area, which the department had last week warned would impact the January Exchequer returns figures.

However the department has shown that the money is still coming into the Government coffers, even if it is later than usual.

By way of example it said that while the January figure for income tax is down by about €150 million on last year, yesterday it had received €150 million more than it did on the same day of 2013.

Excluding the "SEPA" effect, the department says income tax returns are robust and in line with increased employment levels. 

Accounting for the SEPA issue, and a change in the method of payment of the levy on health insurance premiums, the Department of Finance says tax receipts overall are up by approximately 5% year on year.

The VAT take was also affected by the SEPA change, with January being the biggest VAT payment month of the year.

€1.37 billion in VAT payments were made, down €372 million year on year.  However, €315m in VAT was collected on the first banking day of February, compared with €14 million on the same day in 2013.

Excise duty was up €24 million or 7.4%, boosted by strong car sales in January.

On the spending side, net voted expenditure is running €127 million ahead of January last year, but this again is impacted by SEPA issues, as PRSI receipts for January were delayed.

The Budget deficit for the month is €1.14 billion, compared with a surplus of €704 million last year. 

Last year's figure was helped by the sale of contingent convertible debt instruments in Bank of Ireland, which was a one-off transaction. 

Meanwhile this year's deficit was worsened by the SEPA impact, which is expected to even out across the year.