Mary Lou McDonald
Question:45. Deputy Mary Lou McDonald asked the Minister for Finance his Department's estimate of the total amount of revenue lost from tax avoidance in 2013 and projected to be lost in 2014. [5953/14]
View answerThursday, 6 February 2014
Questions (45)
Written answers
It is assumed that the Deputy is referring to transactions that would be regarded as abusive tax avoidance transactions under the general anti avoidance rules (known as GAARs ) available to the Revenue Commissioners. Where transactions are entered into for the purposes of avoiding tax and are detected by the Revenue they are challenged by Revenue under the relevant anti avoidance rules. In the case of direct taxes, there is a general anti avoidance rule (GAAR) contained in section 811 of the Taxes Consolidation Act 1997 and, in the case of Value-Added Tax, there is an Abuse of Practice principle under EU law to counter avoidance transactions.
I am informed by the Revenue Commissioners that over the course of 2011, 2012 and 2013 some 77 transactions (36 in 2013) were challenged under section 811 as tax avoidance transactions that should be unwound so that the proper tax due was paid. The tax in dispute in these cases is circa €134.5 million. If Revenue s view of the transaction as a tax avoidance transaction is upheld, in the majority of cases, interest and a surcharge of 20% of the tax will become payable in addition to the tax in dispute. 73 of the 77 cases have appealed the Revenue s challenge on the basis that the transactions concerned are not tax avoidance transactions within the meaning of section 811. In addition, Judicial Review proceedings in the High Court have been initiated by 21 of the cases concerned challenging Revenue procedures in connection with the use of section 811.
It should be noted, that there are currently about 449 cases actively being pursued where Section 811 Notices of Opinions have issued and the tax at risk is about €200 million. Currently, some 6 VAT cases are being challenged by Revenue under the ECJ Abuse of Practice principle. These cases involve circa €32 million in VAT. All of these cases are at various stages of appeal in the courts up to and including the Supreme Court. In addition, Revenue is also active in countering tax avoidance transactions under specific tax provisions. There are currently 225 of these cases which are being dealt with in Revenue's Anti Avoidance Branch in Large Cases Division, where assessments have been made and appealed by the taxpayers. Cases, in excess of 700, are also being investigated but no assessments have been made as of yet. These cases are generally challenged on their merits and under specific sections of the Taxes Acts. It is difficult to put a figure on the tax amounts involved in these cases as some are at an early stage of being investigated at this point. These type of avoidance cases are also being tackled in Revenue districts around the country.
I know challenging tax avoidance transactions is a priority for the Revenue Commissioners as set out in their Annual Corporate Plan and current Statement of Strategy. I fully support them in this work and will move to legislate against aggressive tax avoidance schemes that the Revenue Commissioners identify and bring forward proposals to have such schemes shut down. In addition, the review of the tax appeal process currently under way may result in reform proposals on tax appeals that may assist in an earlier finalisation of avoidance cases. The Revenue Commissioners further inform me that they are not in a position to estimate the number of tax avoidance transactions that may be challenged in 2014 but they can confirm that the Anti Avoidance Branch in Large Cases Divisions, supported by a nationwide Anti Avoidance Network staffed by officials from each Revenue Region, will continue to progress ongoing investigations and prepare new cases.