Special Committee on the Finance Bill, 1992 debate -
Wednesday, 13 May 1992

SECTION 211.

Mr. Quinn

I move amendment No. 144:

In page 213, to delete lines 47 to 49 and substitute the following:

"(2) (a) An authorised officer provided he has grounds to suspect that tax evasion may be occurring, may at all reasonable times enter any premises or place where he has reason to believe that—".

This section does not refer to VAT per se but to the powers of inspection for PAYE. Earlier on in respect of the necessary provisions and additional powers being transferred from the Customs and Excise officials to the Revenue Commissioners we conceded the need for the transfer of such powers and cautioned that they should be counterbalanced by safeguards for the rights of citizens. Those arguments and discussion stand on their own merits and have some application here but to not cover this section entirely. I am looking for a harmonisation of reasonable practice by the gardaí with reasonable practice by the Revenue Commissioners. The most relevant point here is made on line 14 of page 216 at the start of subsection (2). At present it reads: “An authorised officer may at all reasonable times enter any premises or place where he has reason to believe”, etc. etc. I suggest that that power be counterbalanced by the following: “An authorised officer provided he has grounds to suspect that tax evasion may be occurring may at all reasonable times enter any premises or place where he has reason to believe that”. He must have reasonable grounds to suspect that tax evasion is occurring. The reason for this is to provide a certain balance and not to allow the Revenue Commissioner a panoply of powers which they may use or threaten to use on somebody.

This amendment will check any possible abuse. I do not require the officer to do anything. It should be actionable if a citizen feels that her or his rights have been seriously infringed. There is no procedural requirement, but a requirement of intent in relation to this.

Mr. Martin

Would that amendment place an obligation on the Revenue Commissioners in any subsequent court action to prove that premises were entered with reasonable grounds for suspecting tax evasion? In other words could it end up as a brake on their powers?

Mr. Quinn

No, it is intended as a counterbalance. It is an extraordinary power to be authorised to walk without warrant or prior announcement into a premises and to seize records. As the Act is phrased at present the officer does not have to cite any grounds or reasons other than the internal imperative of the Revenue Commissioners. I suggest that the power be counterbalanced in part by insisting that an authorised officer have grounds to suspect that tax evasion may be occurring. I do not say that the Revenue Commissioners should not be granted this power. There is enough room for manoeuvre in relation to that.

Mr. G. Mitchell

I tabled a similar amendment with the words "provided that he has grounds to suspect that tax evasion may be occurring and that the owner or occupier of the premises is or has been involved in such suspected tax evasion". I agree with a certain amount of Deputy Quinn's amendment and this amendment is reasonable. I would go further and suggest that where practicable the Revenue Commissioners although emergency situations can arise, should be required to obtain a court order. As far as I know in Britain tax law officials entering a premises are required to get a court order; the Minister may be able to tell me if that is correct.

I do not see why a court order should not be obtained before somebody takes away computer records, books or files. Obtaining a court order is not a lengthy procedure. It is not necessary to notify anybody. Extraordinary powers are at issue here; we would not give equivalent powers to the gardaí to tackle the drugs problem in Dublin.

It is not necessary to give the commissioners such extensive powers and I oppose the section on civil liberty grounds. I am in favour of cracking down on tax evasion but these powers are excessive. There should be some restraint. The requirement to suspect on reasonable grounds that tax evasion is taking place should be included; the Revenue Commissioners should be able to stand over that on an affidavit if necessary. Secondly, powers to take away papers and to have a garda arrest a taxpayer who interferes with a person entering a premises to take away papers without a warrant, are quite draconian and should not be awarded lightly. The Minister might consider deferring this section of the Bill or considering some sort of reasonable amendment if not on this stage, on Report Stage.

Mr. B. Ahern

I am amazed at Deputy Mitchell's remarks. These powers have been available since 1972. The Revenue Commissioners, as the Deputy knows better than most people here, have been allowed to enter premises to check records for the last 20 years.

Mr. G. Mitchell

They were not allowed until now to present themselves at a premises with a garda and arrest a citizen.

Mr. B. Ahern

The Revenue Commissioners will not arrest anyone.

Mr. G. Mitchell

No, but they will bring a garda with them without a warrant. I will read what the tax practitioners say about this.

Mr. B. Ahern

They are wrong if they construe this section to mean that the commissioners will acquire power of arrest. Read Section 215.

Mr. G. Mitchell

I have read the section concerned. The Minister's officials are wrong. Major powers are at issue here and the Institute of Taxation is not renowned, despite what the Minister says, for endorsing any form of shoddy practice. It is one of few institutes to publish a code of ethics and practice for its members and it suggests that this power is so severe in comparison to powers available to British revenue officials that it should be deleted now and put into the Bill later in the year after due consideration. The Minister is wrong to say that the section is a repetition of a former one.

Mr. B. Ahern

I will debate anything fairly but I will not debate inaccuracies. If the Institute of Taxation have not checked their facts, that is not my fault. Section 215 clearly states:

". . . .In accordance with the said section 127A, 17A or 34 enters any premises or place he may be accompanied by a member or members of the Garda Síochána and any such member may arrest without warrant any person who obstructs or interferes with the authorised officer in the exercise or performance of his powers or duties under any of the said sections."

There is no question here of the Revenue Commissioners arresting anyone.

May I explain where the requirement for this power originated? Will somebody on this Committee tell me how a revenue officer is to find out about under the counter payments in Larry Goodman's office if he is not allowed question, and make enquiries?

Mr. G. Mitchell

I am not suggesting that we should not give these powers but that they should be subject to due process of law.

Mr. B. Ahern

Are we going to insist that Revenue have de facto proof before they can start investigating? Is that the position?

Mr. G. Mitchell

I suggest that they go through due process.

Mr. B. Ahern

A court order.

Mr. G. Mitchell

As they do in Britain.

Mr. B. Ahern

Does the Deputy know what was revealed at the Beef Tribunal about court orders?

Mr. G. Mitchell

Let me tell the Minister what the four accountancy bodies say in the Consultative Committee on Accountancy Bodies (Ireland) about section 215. "This section gives the Garda Síochána power to arrest without warrant any person who obstructs or interferes with a revenue audit. We believe that the unprecedented powers provided for in this section are out of all proportion with any difficulties which revenue officials have encountered in audit situations and strongly recommend its withdrawal." All four accountancy bodies concur. Somebody is leading the Minister astray on this section if he upholds such a strong response to a reasonable suggestion and he might consider this matter between now and Report Stage.

Mr. Enright

The incidence of financial scandals over the last few years renders this section politically popular with a large number of people. Many people will say it is commendable and highly advisable to give additional powers to the Revenue.

Mr. Dennehy

That is most unfair. For the past five years I have listened to Deputy Mitchell as chairman of——

Mr. G. Mitchell

The Deputy should not introduce extraneous matters. I have quoted the four accountancy bodies and I have been perfectly reasonable throughout this debate.

Mr. Dennehy

Deputy Mitchell does not need to shout. I cannot hear the Deputy when he shouts.

Mr. G. Mitchell

I happen to be a very dedicated Chairman of the Public Accounts Committee and have attended each meeting from beginning to end for the past eight or nine years. If Deputy Dennehy cannot read the section and argue on it he should not get personal.

Mr. Dennehy

We have had no difficulty over the past three days with anybody here.

Mr. G. Mitchell

The Deputy should not introduce personal matters.

Mr. Enright

Did I say something wrong?

Mr. Dennehy

This is the first time we have had this kind of interference from persons trying to make a point. I have listened to departmental secretaries being put through the mill on tax evasion and they answered that they did not have the powers to intervene. We grilled them as to how people were able to get away with trickery and crookery and we were told where the weaknesses lay.

I refute the suggestion that financial scandals over the past twelve months or so make this measure popular. In the context of industrial safety inspectors have had to give notice of a visit to a site or plant and that became a joke because after receiving notice, everything was put in order. Under this Bill, power of arrest will apply only in cases of obstruction or interference with a civil official and the Gardaí are already empowered to arrest anybody interfering with the law in any way. Are the accountancy bodies suggesting that we should not facilitate law enforcement and that anybody may obstruct a Revenue officer with impunity? Without Garda backup the Revenue Commissioners would find themselves in a weak position. This power was introduced in 1972 and it was obvious then that it was needed. I mentioned the Committee on Public Accounts because when the Committee questioned Revenue officials about recent financial scandals current legal shortcomings were pointed out to us. I have learnt about the difficulties Revenue officals encountered and I have sought to have the situation changed, apart from the exigencies of January 1993. We were already trying to halt the incidence of fraud. Legitimate business people have nothing to fear. It is only those hiding something that have reason to worry.

Mr. G. Mitchell

I did not introduce the notion that this provision might be politically popular. I quoted the Institute of Taxation and four accountancy bodies and for that the Minister went down my throat. I quoted their statement onto the record exactly. I take the same view as the Minister and Deputy Dennehy about stamping out fraud and bad practice but it is bad practice also to give powers of this kind to the Revenue simply because Revenue officials demand them or say they require them. That is not our job. We have to be sure that laws are reasonable under all circumstances. This provision is not reasonable under all circumstances, and it is my job as legislator to say so.

Mr. Enright

I was in possession and Deputy Deenehy interrupted me. In the present climate there is a strong demand from the public that Revenue officials be empowered to ascertain where fraud is taking place and to take steps to eliminate it. If I have any criticism of the Revenue Commissioners, it is that they have not utilised the powers they already have to intercept tax evaders.

The Minister mentioned the Goodman organisation. Revenue officials were empowered to check Goodman's records of VAT, income tax payments etc., but they failed to do so. I am not speaking on behalf of an accountancy body but for ordinary citizens across the country. Serious instances of fraud have arisen in this country and section 211 contains some good and relevant points.

Overall, however, this section goes overboard. Section 211 (2) (a) authorises a Revenue officer to enter a premises at all reasonable times. There is no definition of "reasonable time" nor of "reason to believe", two examples of the subjecturity of the provision. Subsection (2) (b) permits the seizure and retention of records, again, "if he has reason to believe".

Mr. B. Ahern

Those provisions are there since 1972. I do not mind complaints about new provisions but this section re-enacts provisions that have been there for 20 years.

Mr. Enright

Section 211 contains provisions which when taken in conjunction with the additional powers for authorised officers and Garda Síochána in section 215, require serious consideration. The Revenue Commissioners are receiving over extensive powers. At present a person involved in any crime whether violence, larceny, rape or kidnapping, has, on arrest by the gardaí, the right to remain silent whereas in these sections presumption of innocence until proven guilty is abandoned and a person is considered guilty until he is able to prove his innocence.

Mr. Dennehy

They are only part of the section.

Mr. Enright

Most of the revenue officials I have met have been exceptionally courteous and helpful. Most taxpayers comply with rules and regulations and are anxious to be honest and straight. This section contains powers which may be used to scapegoat ordinary taxpayers. If the Minister listened to his back bench TD he would discover that there is grave concern among ordinary people that they are getting the wrong end of the stick. Big companies have been ripping off the system while we were chasing up ordinary taxpayers.

Mr. Martin

We are debating whether the powers contained in this section are too great. The Minister has made the point and he might reiterate it that many of these powers have been available to the Revenue Commissioners for many years. That is my first point. Secondly, I am wary of relying heavily or totally on the advice of accountancy bodies alone. Deputy Mitchell in his presentation referred to the Institute of Taxation and the accountancy bodies almost as if they had a veto——

Mr. G. Mitchell

We have no civil service to advise us.

Mr. Martin

That is a difficulty in our democracy. I suspect that these bodies have a certain vested interest in this business. In many respects their functions is to help people avoid paying tax or to——

Mr. Rabbitte

Minimise.

Mr. Martin

——minimise their liability Their analysis is not totally objective and may not be totally in the interests of the Exchequer or State or Parliament. Why should anyone object to an official seeking access to records in the first place?

Mr. G. Mitchell

There is no objection; we demand due process.

Mr. Martin

The Bill provides that where someone refuses to make records available or in some way obstructs the Revenue Commissioners from gaining access a garda can be summoned and records seized. We have all seen in major fraud cases how going through the courts can delay an investigation unnecessarily. The Minister attested to the fact that a computer disc may contain enormous quantities of relevant information; in this way liability might be established before a case ever comes to court.

Mr. Kirk

Time is against us. We have a vote at 7.30 p.m.

Mr. Noonan (Limerick East)

In the afternoon we had an extensive debate arising from the VAT section and the enforcement of the new VAT regime. We freely entered into Chapter VII at that stage. We voiced certain concerns to the Minister and he indicated that he would examine them between now and Report Stage. We also said in effect that we would be prepared to concede these sections to the Minister this evening without a division hoping that our fears might be allayed by the way in which these sections will be implemented between now and autumn. If we have doubts about them in autumn we will ask the Minister then to take out these sections.

Fears have been expressed that we may be imposing a regime here which is more stringent than the UK regime and that on paper, whether they exercise them or not, Revenue are being given powers which jeopardise the civil rights of the individual. We are up against our self imposed time limit. We would be happy if the Minister would guarantee that he would take another look at those sections on Report Stage, and that there will be a full review and an opportunity to debate these provisions extensively in the second Finance Bill in the autumn. On that understanding we would be prepared to concede the sections.

Mr. Rabbitte

That is a reasonable suggestion. We are not talking about the generality of taxpayers here but about fraudsters, effectively.

Mr. G. Mitchell

Only a handful of people were imprisoned in the Sallins incident. I am concerned about the principle here, rather than the number of taxpayers who might be affected.

Mr. Rabbitte

There have been a number of celebrated fraud cases. I want to be careful here but there are widespread views that if access might be obtained to one or two offices around town valuable information relevant to investigations that are still under way would be found there.

Mr. Quinn

That used to be said about Deputy Rabbitte's party offices.

Mr. Rabbitte

With respect to Deputy Mitchell if a court order was mandatory much of the value of the process would be undermined. I support Deputy Noonan's suggestion that we see how these sections work for a period and if they infringe civil liberties seriously then we will deal with it.

Mr. G. Mitchell

I go along with the sentiments expressed by Deputy Rabbitte but if it can be done in Northern Ireland in a different way to protect civil liberties why can it not be done in the same way here?

Mr. B. Ahern

There is no self assessment in Northern Ireland. People there are not allowed the luxury of sitting at home watching football while filling in their own forms. That is the answer to that. The Institute of Taxation did not give the Deputy that information in their brief.

Mr. Enright

Self assessment provisions should not entitle the Revenue Commissioners to infringe civil liberties. It concerns me that this provision is going on the statute books.

Mr. B. Ahern

I have no difficulty with what Deputy Noonan suggested. We can look at this under a few aspects in autumn if we have to; it can be an ongoing process. Self assessment leads to this. I have to answer reports that the self assessment system is not effective. We concede substantial powers to taxpayers on self assessment; we place them on trust. Why do we want a garda going along? Most of these provisions are replicas of 1972 provisions, a number of Members do not understand that. On the additional powers, I could go through a huge amount of data explaining the necessity for them which I thought everyone here was familiar with. On a daily basis, Revenue officials are threatened, intimidated, have dogs set upon them and are attacked by a small number of people. The Garda provision is brought in for those kind of circumstances, to protect officials and others.

Mr. G. Mitchell

Nobody objects to that.

Mr. B. Ahern

That is all I propose.

Mr. G. Mitchell

The Minister should address himself to the point being made and not answer according to the dictates of the Civil Service.

Mr. B. Ahern

If we gave Revenue powers so that they could do their job they would not be open to attack from Deputy G. Mitchell in committees in the House.

Mr. G. Mitchell

The Minister is trying to get personal because he is not able to deal with the issue. He is being dragged along by the nose and has introduced this section without thinking about it.

Mr. Dennehy

That is outrageous.

Mr. B. Ahern

It would have been useful for Deputy Mitchell if he had turned up for some of the two and a half hour debate——

Mr. G. Mitchell

I came in for the amendments I have tabled. I am not going to sit through sections where civil servants tell the Minister how to answer. I will quote that to the Minister on Report Stage together with some of the things he has said here at the dictate of his advisers.

Mr. B. Ahern

I did not think I would have to defend myself to the generality of taxpayers when bringing in a few simple rules to try to get compliance with a reasonable tax system. If Deputy Mitchell finds it offensive that Revenue officials should have some protection——

Mr. G. Mitchell

I find it offensive that there is no due process.

Mr. B. Ahern

This system has been there for 20 years with no difficulty.

Mr. Martin

We have had debates all day without personal attacks.

Mr. B. Ahern

Deputy Noonan has asked for these sections to be monitored closely. I assume the Deputy is talking about new sections, sections that have not been there since 1972. I assure the committee that the new sections will be monitored by the Government and the Revenue Commissioners. The Revenue Commissioners have to keep faith and confidence with compliant taxpayers and are not interested in getting into difficulties with them. In all of the reports and inquiries in recent months the position has been laid out that the Revenue Commissioners need stronger powers to deal with investigations. They have go into offices, factories and homes to obtain information and that is one of the issues which I will continue to monitor.

Amendment, by leave, withdrawn.

Amendment No. 144A not moved.

Mr. B. Ahern

Some of the amendments raised by Deputy Mitchell on sections 222 and 223 — two of the sections where there are difficulties — will be brought back. Those sections cover the PAYE directives. We have all received correspondence on those sections.

Mr. Noonan (Limerick East)

We signal that we reserve the right to enter an amendment to any of the sections in Chapter VII on Report Stage.

Section 211 agreed to.