Vol. 557 No. 1
72 Ms Burton asked the Minister for Finance the action the Revenue Commissioners intend to take arising from a case highlighted in the report of the Comptroller and Auditor General in which a property developer who built apartments, townhouses and a shopping centre had a number of substantial tax bills written off due to the fact that the Revenue Commissioners could not locate him; and if he will make a statement on the matter. [21426/02]
Operational matters concerning individual taxpayers are a matter for the Revenue Commissioners and confidentiality must also be borne in mind. As a result of these constraints it is not possible to reply with full details of this case.
However, I am advised by the Revenue Commissioners that the events referred to in the particular case took place over a considerable period of time. It is a feature of the property development sector that a different limited company is usually formed for each development. The amounts written off related to the liabilities of individual companies of which the property developer was a director. In the case of limited companies outstanding tax liability can normally only be collected from the company itself. Where there are outstanding liabilities from a company that has ceased trading, confirmation from the director that the company has ceased trading is usually sought. In the case in question it proved difficult to establish the identity of the director and, in the circumstances, a decision had to be taken without contacting him. The decision to write-off the tax was made on the basis that the company had ceased trading and there were no assets in the company to meet the outstanding liability.
As a result of the Comptroller and Auditor General's findings the decisions to write-off the tax have been re-visited in each case. In general, decisions to write-off the tax remain valid in so far as they relate to the individual companies. I understand that the Revenue Commissioners are, however, also examining the financial situation of the property developer himself and a formal investigation is under way to determine if there has been under-declaration of income. This is now the most appropriate way of recovering any tax that might have been underpaid.
More generally, the Revenue Commissioners have advised me that many of the collection shortcomings highlighted by the report related to collection activities from some time ago. Over the years the whole approach to tax default has improved significantly and continues to be improved as lessons are learned. It is clear that the pursuit of the cases referred to would be radically different today.
Of particular relevance in this case is the Companies Registration Office's search facility which has been available since September 2000 and now provides Revenue with the ability to examine records in that office. The significance of this facility is that it allows officers involved in compliance to create the links that the Comptroller and Auditor General mentioned in his report. Such a facility was not available prior to September 2000.
While the Revenue Commissioners are confident that many of the collection shortcomings identified by the Comptroller and Auditor General no longer arise in practice, the report demonstrates that there is always room for further improvement. Since the Comptroller and Auditor General's report, the Revenue Commissioners have introduced additional measures to improve effectiveness in this area. The need for possible legal changes is also being examined and I will consider this aspect further in the context of the Finance Bill.
In the context of the facts of this astonishing case, where a wealthy property developer and builder, despite making millions of pounds profit on the sale of property and having a number of companies, managed to have insufficient income to pay a modest residential property tax, is the Minister satisfied that the Revenue Commissioners are competent and have sufficient resources to operate satisfactorily in view of their failure to collect tax in this instance?
In the context of the Minister's reply and the improvement of information technology and links between the Revenue Commissioners and the Companies Registration Office, can it not be argued that the annual return should be significantly amended for certain types of occupation, particularly developers and builders, who have had an exceptionally good two decades? Should not their statements to the Revenue Commissioners be amended to include not only their statements of earnings, but also detailed statements about their asset holdings, investments and the names of the companies and trusts with which they are associated? My colleague raised the question of two widows who could not get redress from the Revenue Commissioners yet there are people driving around this town in top of the range Mercedes cars costing €120,000 or more who are not capable of paying income tax.
The Deputy should not go down the road of the politics of begrudgery. If someone can afford a high-powered car more luck to him or her.
I am delighted for him or her provided he or she is paying tax. Good luck to him or her.
The Deputy will not take advice from me but that kind of politics has outlived its usefulness. Deputy O'Keeffe might even agree with me. Most of the tax in this case arose from companies which had been out of existence for many years. The tax collection system has been improved recently and one of the most significant changes has been the facility now available in the Companies Registration Office.
This case shows the difficulty which limited liability poses for tax collection. As the Deputy is aware, a limited company is a corporate sole and has an existence of its own. The shareholdings are owned by different people, often a husband and wife. The only assets that can be touched are those of that limited company. The Revenue Commissioners have improved their system recently to enable them to identify companies which close down and then re-start with the same directors. I am satisfied with their approach. They have made enormous changes in the past ten to 15 years and carry out their work efficiently. I have given them extra resources and am satisfied that they now have sufficient resources.
Questions relating to the annual return are matters for the Revenue Commissioners. If necessary, I will consider them.
