The Revenue Commissioners is to pay out an estimated €30 million to legal firms over the next six years to assist with the recovery of tax debts in the courts.
In a bid to incentivise legal firms to recoup as much tax debt as possible in the courts, tender documentation issued by Revenue states that "it is intended that a major portion of the remuneration of the appointed solicitor firms will be in the form of commission expressed as a percentage of amounts collected".
The tender reveals that Revenue continues to ramp up its efforts to recover tax debts in the courts and last year the yield from solicitor enforcement was €38.7 million which was a 43% increase on the yield of €27.05 million in 2023.
As part of the remuneration structure in Revenue's planned multi-supplier framework for the provision of the legal services, Revenue states that it is conscious that there may be some cases where costs will be incurred and where recovery does not prove possible.
The tender shows that in the issuing of court proceedings against a tax debtor, a commission to legal firms of 4% of the first €4,000 and 2% of the balance of tax and interest collected will be applicable in a successful case.
For complex work where input to cases at Senior/Partner level is necessary, Revenue has stated that firms can charge €300 plus VAT per hour and for "out-of-scope" work outside the standard debt enforcement/proceedings not requiring input from Senior/Partner level firms can charge €200 plus VAT per hour.
The tender states that the number of referrals by Revenue to legal firms for the collection of outstanding tax debt totalled 7,360 in 2024 which was a 35% increase on the 5,439 referrals in 2023.
The aggregate value of the referrals last year totalled €163.63 million and produced a yield of €38.7 million and this compared to €143.44 million of referrals in 2023 which produced a yield of €27 million.
The tender states that "although collection activity can yield a reward several years after commencement, the great bulk of yield is obtained within six months of referral".
The tender states that it is the intention of Revenue to effectively utilise the full range of enforcement options, as appropriate, to reach a final conclusion in every case.
It says: "The desired conclusion is the recovery of the debt due and the establishment of a pattern of full compliance."
In new tender documentation issued, Revenue has stated that the work "involves debt collection proceedings in the District, Circuit and High Courts, Court of Appeal, and the Supreme Court for the recovery of tax and interest due".
The closing date for tenders is October 1st.
Reporting by Gordon Deegan
