Defaulters fail to disclose full tax liabilities

ONE-IN-FIVE tax defaulters who availed of a voluntary disclosure scheme to avoid the risk of prosecution in relation to bogus non-resident accounts, failed to reveal the full extent of their liabilities.

A Revenue Commissioners review of a sample group of 268 people who were meant to have come clean under the scheme found 54 of them had under-declared the amount they owed. They were made to pay an additional €6 million.

Results of the review were released by the Comptroller and Auditor General (C&AG), John Purcell, in his annual report yesterday, raising questions about the reliability of the information supplied by the 3,407 other people who also made voluntary disclosures.

The scheme, which closed in November 2001, yielded €227m in unpaid tax, interest and penalties up to June this year. An additional €390m was taken from other defaulters whose liabilities were discovered in a trawl of accounts held by financial institutions.

That trawl is continuing and Revenue told Mr Purcell it was expected to bring in a further €20m in the next couple of years. Mr Purcell also received an update on progress in other tax evasion investigations, including the National Irish Bank offshore investment scheme which is expected to come to an end in the next 12 months. It has reached settlements of €51m in 308 cases but investigations are continuing.

There are still 79 Ansbacher cases being investigated and Revenue said some were likely to end up in the courts, while 23 cases arising from the Mahon Tribunal and 16 cases raised by the Moriarty Tribunal have yet to be concluded.

The most recent investigation, which centres on life assurance products used to hide undisclosed income, has yielded almost €400m in voluntary disclosures from just over 5,000 defaulters.

At least 5,000 others indicated they would make voluntary disclosures and others are being tracked down through trawls of financial institution records. Revenue told Mr Purcell they expected the investigation to take a number of years to complete and that the final yield could exceed €500m.

In total, all the special investigations have to the end of June 2006 brought in payments exceeding €2.2 billion.

Other issues highlighted by Mr Purcell include tax write-offs which last year totalled €143m. The biggest single liability cancelled was €8.2m owed by a company in receivership but there were also five other cases where the amount written off exceeded €1m.

Checks showed the write-offs complied with regulations but the Revenue Commissioners are reviewing one case where a tax debt of almost €95,000 was written off on “compassionate grounds” and a report is awaited by the C&AG.

Mr Purcell also inquired about the monitoring of the increasing number of Irish residents with property and/or businesses abroad and was told of difficulties determining the tax liabilities of such people.

“In general business transactions are conducted through corporate vehicles and it may not be apparent from the more complex transactions where there may be a number of corporate vehicles that the ultimate ownership lies with Irish residents,” he said.