Rogue company bosses will become personally liable for unpaid PRSI under a proposed tough law tackling tax evasion, it was revealed today.
The new legislation will target serial cheats and tax dodgers and is intended as a deterrent at a time when the number of businesses going to the wall is increasing.
The Dáil’s public spending watchdog, which proposed the reform, said firms going bust which make attempts to settle their tax bill with the Revenue Commissioners have nothing to fear.
Bernard Allen, Public Accounts Committee (PAC) chairman, said: “We must always recognise honest failure.
“We are after the blackguards and we are after the cowboys.
“If our recommendations are accepted, it will be a deterrent to the cowboys but it will not discourage the bona fide business people who wish to do business in this country.”
Last month, the exclusive Residence private members’ club on St Stephen’s Green, a remnant of the Celtic Tiger boom years, went into receivership.
The owners, socialite twins Simon and Christian Stokes, were criticised in the High Court by Judge Peter Kelly for operating their business using employees’ tax monies which was owed to the Revenue.
The PAC said Ireland should model itself on the UK system and target company directors with a track record of non-compliance.
It said bosses can currently walk away from tax debts and set up business again - dubbed “phoenix operators” by Revenue.
Last year, there were 536 companies in the Revenue’s phoenix monitoring programme.
Around 40% do not have their tax affairs up-to-date.
The committee found that Revenue has written off more than a billion euro of fiduciary taxes in the past 10 years, primarily PRSI and PAYE, although only around 15% is believed to be due to tax-dodging activities.
Mr Allen added: “While the committee accepts that many companies become insolvent because of genuine trading difficulties and only go into liquidation after valiant efforts to save the company, there is evidence that some directors are manipulating limited liability status to circumvent their tax responsibilities.”
“Often, such directors will reopen a business, normally in the same type of trade, under a different name.”
Other recommendations include ensuring company directors have tax affairs in order before being appointed.