FLAC encounters “conflicting and confusing explanations” for the PUP tax
Eilis Barry
Legal Rights Group FLAC has criticized ministers for making “contradicting and confusing explanations” for the retrospective taxation of the Covid Pandemic Unemployment Payment (PUP).
Secretary of Social Protection Heather Humphreys told RTÉs News at One that the government “has always been clear that this payment will be treated as income from Revenue, similar to Jobseeker’s Allowance,” and that the retroactive nature of the legislation that taxed the PUP is a matter of Revenue is ”.
However, Eilis Barry, CEO of FLACMs. Humphreys’ comments, which have been addressing this issue for several months, said they had “no legal basis”. She stressed that the payment is only subject to income tax under Section 3 of the Finance Act 2020, which has been applied retrospectively.
Christopher Bowes BL, FLAC Legal Secretary, said: “The reality is that most statutory social benefits are classified as income by income, but payments such as unemployment benefits and bonuses are expressly exempt from tax regardless of this categorization.
“The legislation on which the PUP is based was only introduced in August 2020 and at that time, for legal reasons, was regarded as an urgent need payment, a form of supplementary social assistance that is also expressly exempt from income tax.
“It is also wrong of the Minister of Social Protection to claim that the retroactive taxation of the PUP is a matter of revenue. The taxation of the payment has been effected by legislation and Revenue has no discretion in this regard as it has to implement the legislation passed. FLAC’s concerns about this issue were presented to the government well before this legislation came into force. “
Ms. Barry said, “Today’s News at One interview is the latest in a series of contradicting and confusing statements by the government regarding this matter that have no legal basis.
“Treasury Secretary of State Seán Fleming TD previously falsely asserted that Section 3 of the 2020 Act is not retroactive and that the legislation in force at the time the PUP was introduced would always be subject to income tax.
“In discussing a separate provision of the Finance Act, the Minister of Finance also endorsed the principle that ‘changes to tax law are generally made prospectively so that they do not apply until the date they are legally effective,’ but refused from applying this principle to the taxation of the PUP.
“When I wrote to the Treasury Secretary last year to set out FLAC’s concerns in Section 3 of the 2020 Finance Act, his office redirected me to the Minister of Social Protection’s office.”
She added: “It is up to the government to recognize that applicants for the PUP could not have known that the payment would be taxable when it was introduced, and that this appeared to be beyond doubt when the PUP was put on a legal status in August 2020, but that this position was reversed in December 2020 when it was decided to make the PUP taxable retrospectively through further legislation.
“You should also seek advice immediately on the constitutionality of this measure, taking into account the stress and confusion that has been caused so far.”