Financial cheats face double trouble

DELINQUENT taxpayers, who used life assurance products to dodge tax, could be forced to pay double their original investment to the Revenue Commissioners to clear their tax liabilities, it emerged last night.

Tax specialist Michael Mullins of accountants HLB Nathans said that a tax dodger who invested a lump sum of £50,000 (€63,486) of untaxed income in a life assurance product in 1991 will face a tax bill of at least €139,251 as a result of the latest tax investigation by the Revenue Commissioners.

Mr Mullins said that this bill is made up of tax and PRSI at 55.25% of €35,076, 100% penalty of €35,076 and 197% interest of €69,099.

Mr Mullins said that where the tax liability arose after April 5, 1991 the rates of interest are from 200% down to 12% and where the liability arose last year, and the rate of penalty is 10%.

Where an individual held a bogus non-resident account or an offshore account or both and did not mention the assurance product during a previous disclosure, the minimum penalty is 70% of tax.

Mr Mullins said that it is legitimate to ask why the Revenue Commissioners have launched an investigation into the life assurance industry.

Mr Mullins said the industry while taking monthly payments from customers also catered for individuals who wished to invest significant lump sums.

“Revenue say that from their investigation of bogus non-resident accounts (BNRs) and offshore funds, in the last number of years that considerable money moved between the BNRs and offshore funds and assurance company related products.

“Revenue are therefore of the view that these assurance related products were used by individuals to hide ill-gotten gains as money was transferred between the BNRs, offshore accounts and assurance products. “Revenue should have been informed at this stage where the taxpayer had a BNR or offshore account and the taxpayer should have paid his tax to Revenue. If he has not done so at this stage he has a serious problem and should immediately contact a professional tax adviser,” he cautioned.

Mr Mullins said that the Revenue Commissioners believe that there are tax dodgers in Ireland who did not have a BNR or offshore account and who invested in an assurance products.

“These are the individuals who we want to hear from before May 23. The Revenue press release says that they want to hear from individuals who invested more than €20,000 which was approximately £15,000 in assurance products where the money invested came from non taxed sources,” he said.

He said that where an individual knows that the money invested came from un-taxed sources they need to contact a tax adviser who will make a declaration on his behalf to the Revenue before May 23 saying that he wishes to make a “Voluntary Disclosure.”

“There are those who feel that they may not be discovered. Remember that since 1999 the Revenue have powers to enter financial institutions. In order to avoid Revenue officials arriving at their premises everyday financial institutions usually give the Revenue what they request. There are those who did not participate in previous investigations and who have found to their cost that the Revenue have obtained information from all the financial institutions in Ireland and from some on Jersey and Isle Of Man,” he said.

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