Cycle to work scheme is taking us for a ride, warns PAC chairman

THE high-profile cycle-towork scheme is being abused by cyclists and employers, Seán Fleming, the Chairman of the Public Accounts Committee, has warned.

Mr Fleming claimed anecdotal evidence suggests the absence of scrutiny on claims suggest that, as he puts it, ‘the cycle-to-work scheme is taking taxpayers for a ride’.

Questions to Finance Minister Paschal Donohoe by the PAC chair revealed that the Revenue has no capacity or procedure in place to monitor the scheme and that no data is available to determine how many bicycles have been subsidised by public funds.

‘Absence of scrutiny on claims’

The Government’s cycle-towork tax initiative is designed to allow employees claim a bicycle and safety equipment worth up to €1,000 once every five years.

Under the scheme employers can pay for bicycles and bicycle equipment for their employees and the employee pays back through a salary sacrifice arrangement for up to 12 months.

The employee is not liable for tax, PRSI or the Universal Social Charge on their repayments. Mr Donohoe and several Cabinet members are keen cyclists.

However, despite the health benefits, Mr Fleming warned ‘the absence of any monitoring system means the scheme is dangerously open to abuse’.

Mr Fleming was commenting on the response of the Finance Minister to queries on the number of cyclists that have made a claim under the scheme for each year since it was introduced and the cost of the scheme for each year to date.

The Finance Minister said: ‘The scheme operates on a selfadministration basis, with the employer having no obligation to obtain advance approval for the scheme, or to notify Revenue that they are operating the scheme.’ They must, however ‘retain all documents in relation to the scheme as they may be subject to Revenue’s normal compliance procedures’.

Mr Fleming said: ‘It is rather astonishing to think that there is no system in place to monitor the number of bicycles being bought under this scheme and the subsequent cost to the taxpayer.

‘The provision of this initiative is important especially for the promotion of exercise.’ But, he warned, ‘there’s no explanation or justification as to why it isn’t being appropriately regulated.’ No one, he said ‘can determine if this scheme is working effectively, fulfilling its objectives or if the system is in fact being ripped off altogether.’

The TD claimed ‘various reports about abuse have been brought to my attention in recent times’.

Anecdotal evidence gathered by Mr Fleming included: some employees claiming several times every five years; some alleging their bike has been lost, stolen or damaged and reapplying for a new one. Surprisingly, an employer is not required to verify this.

‘I have also been made aware of some people obtaining a number of bicycles under the scheme, receiving [a] €500 tax reduction for each one but then selling the bicycle online for a profit,’ he said.

‘Taxpayers should be able to expect that this initiative is operating efficiently, but without basic data... we cannot assume [it] is being utilised properly.’ He added: ‘A process must be put in place to capture data related to the Government’s... scheme in order to prevent some people scamming the system.’

‘Dangerously open to abuse’