Revenue stops imposing ‘death penalty’

THE taxman has stopped imposing the “death penalty”. Dead tax defaulters, or their surviving families, will no longer have to answer for their evasions from beyond the grave after the Revenue Commissioners changed the rules concerning the treatment of dead taxpayers.

On Wednesday, without notice, the Revenue Commissioners issued an update on “penalties involving deceased taxpayers and personal representatives”.

Revenue told the Irish Examiner: “A doubt was raised on this issue and we took legal advice on the matter. We have now acted on that advice and have announced changes in practice, in relation to agreements not finalised at the date of death.”

The changes mean the Revenue will no longer impose tax penalties on deceased taxpayers or publish the names of deceased taxpayers in default in their quarterly lists of tax defaulters.

The new rules state: “Where the taxpayer dies before a settlement has been agreed with Revenue, Revenue will not seek recovery of any penalty element from the deceased’s personal representatives (and will discontinue proceedings for recovery of such penalty if they have been initiated).”

Over the last six years the Revenue Commissioners have collected €62 million in unpaid taxes and penalties from the estates of 318 dead people according to the settlements published by the taxman in the Iris Oifigiúil. This is an average of €195,090 per family.

The single largest judgment against the estate of a dead person published by the Revenue involved the case of the late Des Traynor. A central figure in the Ansbacher tax evasion scandal, his estate made a settlement of €4m.

Mr Traynor, who was a chairman of cement giant CRH, administered millions in funds which paid for former Taoiseach Charlie Haughey’s lavish lifestyle.

The move has been welcomed by the Association of Chartered Certified Accountants (ACCA) whose advisory services manager Aidan Clifford said that the personal representatives of deceased taxpayers should speak to their accountant about commencing proceedings to reclaim both the penalties and excess interest paid in the past. The European Convention on Human Rights Act 2003 was signed into Irish law on June 30, 2003

Mr Clifford said that a person who has evaded tax will face four sanctions: payment of the unpaid tax; payment of interest on the tax; payment of a penalty; and, finally, publication on the tax default list.

“The view has been expressed in Ireland and confirmed recently by the British tax authorities, that penalties can only be imposed by a court, after a fair trial. A deceased taxpayer is not in a position to have a fair trial and, therefore, Revenue can only see repayment of the unpaid tax and normal interest from a deceased tax defaulter,” he said.