Dáil Éireann Debate, Thursday - 22 November 2012
67. Deputy Michael Creed asked the Minister for Finance the initiatives he proposes for the Revenue Commissioners to combat fraud particularly in the construction sector; if he will consider linking tax relief to evidence of tax compliant contractors and the facility of all construction projects above a certain value having to notify the Revenue of commencement; and if he will make a statement on the matter. [52057/12]
View answerI am advised by the Revenue Commissioners that their tax and duty compliance programmes are under constant review to ensure that they are focused on the areas of greatest risk, including risks from fraudulent activity. In the construction sector, Relevant Contracts Tax (RCT) applies to payments made by a principal contractor to a subcontractor under a relevant contract (this is a contract to carry out, or supply labour for the performance of relevant operations in the construction industry). RCT applies to both resident and non-resident contractors.
Following a review of the operation of the RCT system in 2010, a new, streamlined system was developed in 2011 and introduced from the 1st January 2012. All transactions subject to RCT must be notified to Revenue through the Revenue Online Service. This process provides the Revenue Commissioners with real time information on the activities of principal and subcontractors, which reduces the opportunities for fraud, allows for early intervention in suspected cases, and facilitates a more focused compliance approach allowing Revenue to concentrate its resources on tackling the non-compliant contractor and levelling the playing field for compliant contractors.
Revenue has always maintained a significant presence in monitoring activities in the construction sector and is involved in an ongoing programme of construction related audits, compliance interventions and site visits, including one off housing, repairs, maintenance and enhancements.
Some of the specific measures being implemented are:
- Revenue chairs the Hidden Economy Monitoring Group, which provides a forum for the exchange of views and insights into combating the hidden economy. Its membership includes representatives from Irish Business and Employers Confederation, Small Firms Association, Construction Industry Federation, Irish Congress of Trade Unions, DSP, NERA, Department of Enterprise, Trade and Innovation, and Revenue. There are now 4 Regional Shadow Economy Liaison Groups. These regional groups have the same representation as the main group and are more effective at addressing local issues. Other bodies are asked to participate where appropriate.
- Sharing information with the Department of Social Protection, the Department of Enterprise, Trade and Innovation and the National Employment Rights Authority, where appropriate, on shadow activity in the sector is ongoing. Revenue’s Joint Investigation Unit (JIU) continues to work closely with the Department of Social Protection and the National Employment Rights Agency to investigate the shadow economy and carry out joint investigations where appropriate.
- The joint Revenue/Department of Social Protection high-level Steering Group that was set up in late 2009 between Revenue and Department of Social Protection meets regularly to oversee joint initiatives in tackling the shadow economy and welfare fraud. Information/data exchanges have been streamlined recently with the introduction of shared (cloud) computing facilities
- Unannounced visits to one off housing and self -build sites are a regular feature of Revenue activity across all of the regions. In the course of these visits the status of all workers engaged on the site, together with the source of materials used, is checked to ensure compliance with VAT requirements.
- Revenue officers as part of projects to identify suitable sites to visit examine planning applications, and Commencement Notices filed with Local Authorities.
- Revenue uses confidential information and local intelligence to target suspect sites. While they mainly source cases through information in their own systems, I am advised that they also use intelligence gathered from a number of third party sources, including the general public
- Where grants or subsidies are paid out of public funds for construction related works, the contractor must provide evidence that they are tax compliant.
I am further advised by the Revenue Commissioners that they carried out 375 audits on construction related activities in the period January to August 2012, yielding just over €16m.
I am aware that proposals have been made previously to link the granting of tax relief with evidence of tax compliance and, that Revenue would receive notification of the commencement of all construction projects. I am advised by the Revenue Commissioners that they are prepared to consider any proposals that would increase the level of tax compliance in the construction sector. However, they will need to work through the proposals in more detail and consider, in particular, how they would operate in practice. The Commissioners further advise that this can be done as part of their ongoing discussions with industry and other parties. If, following this consultation process, it is felt that implementing the proposals would have value, I would be prepared to consider introducing legislation to cater for any such changes.
