Revenue monitors ‘phoenix’ firms

At least 700 companies are being monitored by the Revenue Commissioners on the suspicion that they may be so-called “phoenix” companies.

Phoenix companies are businesses that have been restarted under a new name after the original business has gone into liquidation.

They are frequently restarted by directors or the associates of directors who have shut their old business in order to avoid paying their taxes and creditors. The Revenue Commissioners are often one of the biggest losers in liquidations.

In the last 10 years, the Revenue has had to write off over €1 billion, mainly from companies that became insolvent and could not meet their tax obligations.

Revenue Commissioners chairperson Josephine Feehily said that the majority of the tax that the Revenue writes off is from cases where businesses ceased trading.

“About 80% of the tax we write off is in cases where the businesses were liquidated, went in to receivership or ceased trading. The legal position is that we can write it back in again if it turns out that we were misinformed and that the business didn’t cease.

“We have an active programme in place so if a business appears again with the same directors in the same shop selling the same things, we monitor them from the very beginning, very tightly,” she said.

The pensions ombudsman Paul Kenny has previously criticised the construction sector in particular for the number of phoenix companies that re-emerge after side stepping their tax and other liabilities. The Ombudsman said that he had found evidence of companies leaving taxes, PRSI, subcontractors, suppliers and even wages unpaid before re-establishing themselves.