Sligo County Council is facing a bill of more than a quarter million euro from Revenue.
It arises because the council did not believe it was responsible for VAT arising from arrangements with contractors to carry out work on unfinished housing developments under a special government scheme.
The actual VAT owed to Revenue is €147,000 but interest and penalties has resulted in an additional €108,000.
Details of the Revenue bill emerged at this week’s meeting of Sligo County Council.
Cash-strapped Sligo County Council has a new financial headache.
And this time, its up against Revenue, which is claiming it is owned €256,521.
For the council, such a bill couldn’t come at a worse time as it strives to put its precarious finances in order, an effort that has included a reduction in staff by a third.
Some years ago, the government made a national fund of €40m available for unfinished developments.
Sligo County Council received €815,000.to enable it do work.
However, Councillor Paul Taylor says the department led the local authority to believe that since there was no requirement on it to act as a so-called principal contractor for the works, it was not liable for VAT.
Now, Council CEO Ciaran Hayes says he hopes the department will not penalise the council by not paying an expected €1million.
Mr Hayes says such a move, were it to happen, would be unfair.
Independent Councillor Margaret Gormley proposed the council call on the areas Dail deputies to set up a meeting with the Minister in relation to the matter.
Sinn Fein Councillor Thomas Healy said that with all the work the council had done on its finances — including the loss of staff — it was now going to be worse off.
Mr Hayes expects to be meeting department officials by the end of June regarding the council’s financial plan and he says he has indicated he will be raisng this issue.
However, it’s believed the department is saying it’s not within its remit to advice local authorities in relation to specific taxation matters.
It says local authorities should satisfy themselves that they have adequately met their tax obligations and if doubt arises, to seek guidance from Revenue.