COMPANY directors who dodge tax should be made personally liable for PSRI contributions collected by the company on behalf of the state.
That is the key finding in the interim report of the Dáil Committee on Public Accounts into Fiduciary Taxes.
Revenue has written off €1 billion in PAYE, PRSI and VAT over the past 10 years due to company failures and non-compliance in many cases by rogue directors.
In 2009 the amount lost alone in revenue was over €202m, reflecting the rising level of company failures in the current tough economic conditions.
About €150m of that money was lost through fraud or through what the reports has dubbed the “phoenix system”, where directors fail to pass on the taxes collected on behalf of the state.
Committee member Roisín Shortall said it was difficult to pin down the total amount lost through company directors exploiting limited liability status to avoid paying tax but it is estimated at 15% of the money due in VAT, PRSI and PAYE.
In the current climate unless tougher measures are taken against directors with records of non-compliance
Many directors start up new companies while their former employees can be left hanging on for months before they get the support from the state to which they are entitled.
The chairman of the committee Bernard Allen TD of Fine Gael said in many cases the state was taking a “double hit” through loss of taxes due while also having to put up the money from the state’s coffers to assist those thrown on to the dole.
“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,” said Mr Allen.
“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,” he said.
He went on to say that legitimate companies had nothing to fear from the proposals.
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