Cyber scrutiny for tax evaders

SELF-employed people have to wake up to the reality that Revenue has become much more focused as a result of its newly ramped-up technology.

This follows recent comments by Revenue chairwoman, Josephine Feehily, who stressed future crackdowns on suspected tax evaders will target the self-employed and will be driven by the technology base Revenue has installed.

Taxpayers needed to understand the age of “being unlucky enough to be caught up in a random audit are at an end”, warned Tony McGinty, director of revenue audit at McAvoy & Associates.

The technology known as the Risk Analysis and Profiling system allows Revenue to cross-reference all the information available to them to build a profile on a taxpayer.

This can be done by matching a history of the taxes paid by that individual with his or her lifestyle information across a number of years, he said.

Through the system it will be easy to see if the taxpayer’s remuneration appears insufficient to fund a lifestyle to fit the profile provided by REAP.

If there is a mismatch the chances are that person will face an investigation by the Revenue, he said.

While the self-employed will be the first to be targeted, foreign property ownership, already the subject of Revenue curiosity, is about to face much tighter scrutiny as well, he said.

In this instance the main objective will be identifying foreign property purchased by Irish residents generating income that hasn’t been declared for Irish tax, he said.

In the new environment, the sharing of information with other EU tax authorities will see greater focus put on those who have not declared the returns on those investments.

In particular McGinty said people with interest-earning bank accounts abroad will become increasingly vulnerable to a knock on the door from the Revenue in the coming years.

As the Revenue tighten the screws on evaders they are also likely to seek new powers to force estate agents to hand over details on those who have invested overseas.

In this new environment self-employed persons with property investments will have to be “in a full state of readiness for any unwelcome attention by Revenue”.

He stressed it was important for people to review their prior year tax returns.

This was to ensure they have on hand explanations for any unusual transactions in their accounting information, if that has not been previously provided, he said.