Priority Questions. - Bogus Account Holders. – Dáil Éireann (28th Dáil) – Tuesday, 19 Feb 2002

Priority Questions. - Bogus Account Holders.

Derek McDowell

Question:

41 Mr. McDowell asked the Minister for Finance the number of High Court orders sought by the Revenue Commissioners under the Finance Act, 1999 to require financial institutions to supply names, addresses and other relevant information regarding holders of bogus accounts; the number of cases where orders have been granted; the progress made in identifying the holders of such accounts who did not avail of the recent voluntary disclosure scheme; and if he will make a statement on the matter. [5871/02]

Mr. McCreevy:

Authorised Revenue officers are empowered to make an application to a judge of the High Court seeking an order requiring financial institutions to supply names, addresses and other relevant information concerning account holders who may have held bogus non-resident deposit accounts. Such applications are made under section 908 of the Taxes Consolidation Act, as provided for by the Finance Act, 1999. I am advised by the Revenue Commissioners that information supplied by the financial institutions under section 908 orders will be the principal basis of identifying bogus non-resident account holders who did not avail of the voluntary disclosure scheme in 2001.

Eight applications for orders under section 908 have been made and have been granted. When one includes institutions which have been taken over or amalgamated with other institutions, these orders seek information in respect of accounts in 11 financial institutions. One other application is pending. I am advised by the Revenue Commissioners that work is currently progressing in relation to other financial institutions and that further applications to the High Court will be made shortly.

Work has already commenced as regards taxpayers who held bogus non-resident accounts which were detected in the course of the DIRT look-back audits of financial institutions in 1999 and 2000 and did not avail of the voluntary disclosure scheme in 2001. Revenue expects that information under court orders will become available on a phased basis commencing shortly.

While it is clear that Revenue is facing a long programme of investigations over a number of years, the Revenue Commissioners are satisfied that significant progress is being made in this new phase of the investigations. Deputies will recall that the earlier voluntary disclosure phase resulted in receipts of £179 million, €227 million, for the Exchequer.

Mr. McDowell:

I think the Minister will agree that the so-called voluntary disclosure depended on a carrot and stick effect, the carrot being the remission of a certain amount of the penalties involved and the stick involving prosecution or investigation by the Revenue. Does the Minister have any reason to revisit the guestimate of the Revenue Commissioners, that there might be 25,000 bogus accounts? Can he give any indication of the results so far of the applications made to court or whether any information has become available from the institutions concerned?

Mr. McCreevy:

The figure of 25,000 was given during the course of the DIRT inquiry and it resulted from a memo prepared by an officer. All Revenue applications for High Court orders will have been made by 21 March this year. Work has begun on an initial list of over 800 account holders identified from accounts detected during the DIRT audit, the process Revenue conducted with the banks over time. Since the scheme of voluntary disclosure ceased Revenue has been making applications to the High Court under the powers I gave in the Finance Act, 1999.

This is a big undertaking. What will be done in the first phase will be to match bogus non-resident accounts with people who availed of either the 1993 amnesty or the subsequent voluntary disclosure scheme of 2001. That will take considerable time. There are a large number of staff in the Revenue Commissioners working on this. As settlements are made, they will be published in the quarterly returns made by the Revenue Commissioners, if the limits are exceeded.

Mr. McDowell:

Does any difficulty arise for the Revenue Commissioners in comparing the information it receives from these returns with the earlier amnesty in 1993 given that that amnesty was carried out on condition that anybody receiving a certificate would be guaranteed secrecy thereafter?

Mr. McCreevy:

I am not aware at this stage of any particular difficulties and doubt if any will arise. If, under the powers of the 1999 Act and court orders, Revenue found and wrote to such a person, whom we may call Mr. A, it would be in his interests to produce for the Revenue Commissioners the certificate from the 1993 amnesty which "amnestises" that particular account. It would be in the taxpayer's interest to produce the evidence. That is what has been happening in recent years. Cases have come to light where the Revenue Commissioners, on foot of normal investigations regarding back duty, have come across persons who said their accounts were "amnestised" under the 1993 legislation. However, I am not aware of any further difficulties, nor do I anticipate any, because it is in the taxpayer's interests to produce the certificate he or she obtained under the 1993 amnesty, or the voluntary disclosure scheme of 2001.

Mr. McDowell:

Does a difficulty arise where somebody made a partial but incomplete disclosure in 1993, where he or she declared part but not all of his or her liability? If one goes back to that person now, he or she can claim that he or she has his or her certificate which debars Revenue from looking at the account or amount.

Mr. McCreevy:

Yes, but the Deputy is talking about the 15% incentive amnesty, which certificate covered a person's total reported earnings and where he or she had to pay a certain amount. He or she would have to prove in 2002 that the amount he or she "amnestised" in 1993 covered the full total, including the amount of the undisclosed bogus non-resident account. The Revenue Commissioners would carry out a normal back duty audit investigation of, for example, Mr. A, whereby they would go over his dealings for a number of years. When it came to a final settlement, he would say he "amnestised" certain amounts under the 1993 amnesty. If a person took advantage of the 1993 amnesty but did not declare or "amnestise", if that is the appropriate word, a bogus non-resident account, he or she is in breach of the 1993 amnesty and will have difficulties under the voluntary disclosure scheme of 2001 also. He or she will not get off the hook in that way.

Dáil Éireann debate -
Tuesday, 19 Feb 2002