Dáil Éireann Debate, Tuesday - 27 April 2004
284 Mr. Deasy asked the Minister for Finance the process of notification utilised by the Revenue Commissioners and financial institutions when contacting holders of bogus non-resident accounts and offshore account holders in the investigation into tax avoidance and tax evasion. [11887/04]
View answerIn the case of the investigation into bogus non-resident accounts, the Revenue Commissioners conducted on site DIRT look-back audits on 37 financial institutions during 1999 and 2000. The focus of these audits was the DIRT position of the financial institutions concerned. In the course of this audit programme, many bogus non-resident deposit accounts that belonged to taxpayers were identified.
The Revenue Commissioners issued a statement of practice, SP-Gen 1/01, in May 2001, which set out a voluntary disclosure incentive scheme for taxpayers who held bogus non-resident deposit accounts and who wished to disclose and pay all their outstanding tax liabilities by 15 November 2001. This approach to the bogus non-resident account problem was extensively publicised at the time. Many taxpayers took the opportunity that was offered and payments of €227 million were made under the disclosure scheme.
Inquiry work commenced on 16 November 2001 to identify taxpayers who chose not to avail of the voluntary disclosure scheme. Eighteen applications for High Court orders under Section 908, Taxes Consolidation Act 1997 were obtained. These High Court orders required the relevant financial institutions to supply names, addresses and other relevant information concerning the identities of account holders who held non-resident deposit accounts. This information was the principal basis for identifying holders of bogus non-resident accounts.
Subsequently, inquiry letters were issued by the Revenue Commissioners to those taxpayers who were identified by this process. The inquiry letters sought disclosures and payment of outstanding liabilities within 60 days of the dates of issue. Some, of course, would have no liability. Since 15 November 2001, payments of €285 million have been made to the Revenue Commissioners by taxpayers who held bogus non-resident deposit accounts and who chose not to avail of the voluntary disclosure scheme.
In the case of the investigation into holders of offshore accounts, the Revenue Commissioners advised the relevant financial institutions that an investigation would be initiated from a specified date and that the normal benefits of a qualifying disclosure, as outlined in the code of practice for Revenue auditors, would be available to those who chose to come forward before that date. After the specified date the holders of offshore accounts would no longer be able to make a qualifying disclosure to the Revenue Commissioners and, therefore, benefit from reduced penalties, non-publication and non-prosecution. The financial institutions wrote to the account holders in question advising them of the forthcoming investigation and of the benefits of making a qualifying disclosure. The Revenue Commissioners also publicly advertised the details of the voluntary disclosure scheme and produced a publication to assist people in understanding whether they might have a liability. The deadline to submit a notice of intention to make a qualifying disclosure was 29 March 2004. Some 15,000 individuals have indicated to the Revenue Commissioners that they will be making a disclosure. The people concerned have until 28 May 2004, to submit a statement of disclosure which should contain a tax computation, a payment and a declaration.
The Revenue Commissioners have informed me that where they discover a person to have held an offshore account and has a non-discharged tax liability but has failed to make a voluntary disclosure within the timeframe, that person will be vigorously pursued for unpaid liabilities. Such an individual can expect to receive an inquiry letter from the Revenue Commissioners along the lines of those issued in connection with the investigation into bogus non-resident accounts.
285 Mr. Deasy asked the Minister for Finance if a deal was struck between the Revenue Commissioners and financial institutions to absolve or indemnify bank officials who may have acted improperly in setting up bogus non-resident accounts; and if he will make a statement on the matter. [11888/04]
View answerThe Revenue Commissioners conducted on site DIRT look-back audits on 37 financial institutions during 1999 and 2000. The focus of these audits was the DIRT position of the financial institutions concerned. In the course of this audit programme, many bogus non-resident deposit accounts that belonged to taxpayers were identified. At its conclusion, financial institutions made payments totalling €220 million to the Revenue Commissioners. These payments represented the DIRT, which should have been deducted together with the related interest and penalties. The Revenue Commissioners made a report on the matter to the Committee of Public Accounts which commented on the outcome of these audits in the final report on the DIRT inquiry, finalised on 3 April 2001.
The Revenue Commissioners have informed me that no evidence was seen in the course of the DIRT look-back audit programme that would support an investigation of an official of a financial institution with a view to prosecution. The Revenue Commissioners also informed me that no deal was struck between them and the financial institutions to absolve or indemnify bank officials who may have acted improperly in setting up bogus non-resident accounts.
With regard to the prosecution of officials from financial institutions who may have assisted in placing funds in bogus non-resident accounts, the primary responsibility for ensuring that a tax return is correct rests with the individual making that return. There is a statutory offence in the tax code of knowingly aiding or abetting another person to make an incorrect tax return. However, generally in the case of third parties, it is difficult to meet the standard of evidence required to incriminate an alleged wrongdoing by a taxpayer who has failed to declare correct income or gains. I understand from the Revenue Commissioners that while, in their experience, aiding and abetting offences are notoriously difficult to prosecute, it would be their general policy to pursue such cases if sufficient evidence becomes available.
