I am informed by the Revenue Commissioners that they have available to them a range of information sources from which they can monitor cash purchases of houses and other real estate which allows the Commissioners determine whether any tax issues arise from any such cash transactions. Under Section 42 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 all designated bodies (including all financial institutions) are required to report to An Garda Síochána and the Revenue Commissioners all suspicious transactions, including any unusually large cash movements. Similarly, any solicitors or other practitioners who execute property transfer instruments are also designated persons for the purposes of the money laundering legislation and must satisfy themselves as to the source of purchase monies in drawing up the transfer instrument and report anything untoward to the Gardaí and to Revenue.
In addition, citizens can, and do, report directly to Revenue instances of unusually high amounts of cash used by individuals in transactions and Revenue reviews all such useful information supplied. This affords all citizens an opportunity to assist in combatting possible shadow economy, money laundering or other nefarious activities.
I am further advised that the Revenue Commissioners audit and compliance programmes are under constant review to ensure that they are focussed on the areas of greatest risk, with a specific focus on those sectors that traditionally have been susceptible to shadow economy activity specifically cash businesses, such as the hospitality sector, including bars, nightclubs, fast-food/restaurants and entertainment, and white collar cash activities, such as doctors, dentists, solicitors, accountants, engineers etc. The Commissioners recognise that a use to which undeclared cash can be put is to purchase properties and Revenue’s risk systems are geared to identify possible instances of such behaviour.
To facilitate and enhance this approach, Revenue has a well established computerised Risk Evaluation Analysis and Profiling (REAP) system. This contains large amounts of data that has been sourced directly from taxpayers via their tax returns as well as information received from a wide range of third parties. As the Commissioners administer the Stamp Duties regime, they also have access to details of all real property sales, purchases and voluntary transfers in the State and this data is also fed into the REAP system.
While REAP ranks the full taxpayer population in terms of risk, it also facilitates the selection of individual cases based on single or multiple business rules. One such rule identifies cases where significant capital expenditure has been incurred, specifically the purchase of houses and other real property, which is out of line with the person’s visible or declared means. Additional data sources available to Revenue that would help identify whether a property was purchased using loans from financial institutions include the Tax Relief at Source system as well as information on borrowings returned by taxpayers in their tax returns. In due course, Local Property Tax data will be analysed to identify property ownership patterns which may be further indicators of risk. I am satisfied that the Revenue Commissioners have a very strong focus on the risk to tax compliance posed by all aspects of the cash economy and have a range of programmes in place to manage the tax risks involved.