Revenue to probe BoI’s Jersey unit

THE Revenue Commissioners will begin a formal investigation into Bank of Ireland’s Jersey offshore banking unit on June 1, a spokesman said yesterday.

It is believed other banks on the island will be targeted as part of the probe.

This investigation will spread to the Isle of Man, another tax haven used by Irish individuals to hide money from the taxman. A tax information exchange agreement between Ireland and the Isle of Man will be finalised shortly.

Revenue spokesman Paul McDonald said yesterday the probe into deposit accounts held by the Bank of Ireland in Jersey will begin on June 1.

The Revenue’s Offshore Assets Group will apply to the High Courts in Ireland and Jersey to compel the bank to reveal the names and details of account holders, it is understood.

Last week, the bank in Jersey sent out around 200 letters to its customers warning them of the forthcoming investigation and telling of them of the reduced liabilities available if they choose to make a full disclosure by May 31.

Bank of Ireland spokesman David Holden said yesterday the bank had written to its customers with the prior agreement of the Revenue.

“The reason we wrote to the Jersey depositors was to say that if there was an issue with these funds before you gave them to us, it is highly likely they will be found by the Revenue.”

Earlier this year, Bank of Ireland closed the section of its Isle of Man business which served Irish depositors. Mr Holden said this was because of the increased tax compliance environment.

“The Revenue is talking to each other in various jurisdictions,” he said.

Mr Holden said the bank hadn’t sent similar letters to its Irish customers in the Isle of Man but hinted that it could do so in the future.

“At the moment, there is only an investigation in Jersey but there are indications it will become more widespread,” he said.

The incentive being offered to encourage tax defaulters to come forward is a reduction in penalties from 100% to between 3% and 10%.

They will also not be prosecuted and names and details of the settlement will not be published.

Mr McDonald denied these concessions amounted to an amnesty for people hiding money from the Irish tax authorities.

“These conditions are not exclusive to this investigation. It is already available to anyone with a tax default, if they disclose the default, there is a mitigation in penalties,” he said.

The Offshore Assets Group has only been in operation for one-and-a-half years but has fiercely wielded the Revenue’s enhanced powers of investigation which came into effect in 1999 in its battle against tax dodgers.

Revenue chairman Frank Daly has warned there will be nowhere left to hide for people seeking to avoid paying tax.

His powers will be significantly strengthened in early 2005 when a special EU directive comes into operation which means information about EU residents holding accounts in other member states will automatically be shared by tax authorities.

This will apply across the EU except for Austria, Belgium and Luxembourg which have hammered out a special arrangement where tax will be levied on accounts and three-quarters of this will be returned to the saver’s country of residence.