More than 110,000 taxpayers have potentially overpaid tax during 2019, 2020 and 2021, by a total of €85million, and are due a refund.

However, letters have also been sent to more than 140,000 taxpayers who may owe approximately €95million in tax combined for the same three years. Revenue has written to more than 250,000 PAYE taxpayers asking them to submit returns for the tax years 2019, 2020 and 2021.

More than 750,000 returns have been filed for the 2019 tax year, 800,000 for 2020 and 970,000 in for 2021.

A Revenue spokesman said: "In line with the usual annual cycle of customer contacts, Revenue is currently writing to PAYE taxpayers in relation to their end-of-year tax position for the years 2019, 2020 and 2021.

"The correspondence provides taxpayers with a preliminary tax position based on information available to Revenue. The preliminary position may indicate a potential overpayment or underpayment of tax.

In Association with

"Taxpayers are being asked to finalise their tax position by filing their income tax return and claiming any additional credits they may be entitled to and declaring any additional income."

Tax refund specialists Taxback.com called on Revenue to provide some clarification around the letters.

Its consumer tax manager, Marian Ryan, explained: "It is our understanding that the vast majority of taxpayers in receipt of this communication from Revenue will never have filed a tax return before, having no other income outside their PAYE earnings, and are now, understandably, very concerned about this request from Revenue."

Taxback.com said there was an urgent need for clarity.

It is believed that Covid support payments may have prompted this action from Revenue.

Ms Ryan added: "Until now, there has never been a mention of these taxpayers having to submit a tax return."