Dáil Éireann díospóireacht -
Thursday, 10 May 1990

Vol. 398 No. 6

Ceisteanna—Questions Oral Answers - Tax Evasion.

Tomás MacGiolla

Ceist:

15 Tomás Mac Giolla asked the Minister for Finance if his attention has been drawn to comments made by various delegates at the annual conference of the Tax Officials' Branch of UPTCS at their conference in Tralee on 3/4 March on the continuing extent of tax evasion and particularly the lack of adequate staff and resources in the Revenue Commissioners to ensure adequate audits of return from the self-employed; the measures, if any, he intends to take to deal with tax evasion; if it is intended to provide additional staff for the Revenue Commissioners; and if he will make a statment on the matter.

Mr. A. Reynolds

I am aware of the allegations regarding tax evasion made by speakers at the recent conference of the Tax Officials Branch of UPTCS in Tralee.

It is, and always has been, a fundamental objective of the Revenue Commissioners to collect the proper amount of tax due at the least cost to the public. I am advised by the Revenue Commissioners that measures to combat tax evasion are kept under continuous review and that there has been a significant redeployment of Revenue resources in recent years into areas directly concerned with combating evasion and other forms of non-compliance with the tax code.

Self-assessment is progressively releasing resources to concentrate on non-compliant taxpayers. Immediately after the introduction of self-assessment and the tax incentive scheme, the Revenue Commissioners gave priority, in using their new resources, to a programme designed to assist the Collector-General to tackle taxpayers who had not availed of the amnesty and also to clear the backlog of appeals and other work for years up to the introduction of self-assessment.

Progress in these areas was sufficiently advanced to enable the Revenue Commissioners to commence a revenue audit programme in late 1989. Audits commenced in Dublin in the week beginning 6 November, in Cork and Limerick in the week beginning 21 November and in all other country tax districts in the week beginning 27 November or 4 December. Initially, 17 inspectors were involved in carrying out audits. The number of adult inspectors was increased to 32 in January 1990. It is intended that the number will be further significantly increased in the course of the year. The Revenue Commissioners are satisfied that they have the staff resources necessary to ensure the implementation of a successful revenue audit programme.

In addition to the audit programme, a compliance programme, to ensure that all persons in receipt of taxable income file a return of income, is now operational in all districts. In recent weeks in Dublin, 22 officers have been nominated for this purpose making a total of 68 officers involved in compliance work.

The return of income is one of the cornerstones of a self-assessment system. In consequence, those taxpayers who do not meet their statutory obligation in this respect are being vigorously pursued and will, if necessary, be prosecuted.

I have recently sanctioned the filling of some key posts in the taxes inspectorate in the Office of the Revenue Commissioners.

Tomás Mac Giolla

The Minister has indicated that self assessment is allowing him release resources to concentrate on non-compliant taxpayers. While I am concerned about the level of non-compliance I am also worried about self assessment. Only about 2 per cent of accounts are audited. Is the Minister satisfied that this figure will be considerably increased following the introduction of self assessment which it has been alleged provides a safe haven for tax evaders given the failure to carry out audits?

Mr. A. Reynolds

Apart from the release of the resources made possible following the introduction of self assessment I have also sanctioned the filling of 18 key posts in the inspectorate and office of the Revenue Commissioners as follows: ten inspectors, six inspectors on a higher grade, one senior inspector and a principal inspector. I am satisfied that the level of audits undertaken will be increased substantially as the year goes on. For the information of the Deputy and the House, as of 31 March 153 audits had been finalised which yielded an additional liability of £1,057,000 and a further four cases had been referred to the investigations branch for detailed examination. In one of these cases a payment on account of £200,000 has been made and in another 77 cases an inspector had completed his or her audit and was awaiting the taxpayer's agreement on counter proposals to the audit findings. A further 85 audits have been initiated. The number of audits completed to date is too small relative to the entire amount to permit any definitive conclusions to be drawn as regards the general level of compliance. It should also be borne in mind that the investigations branch, the special inquiry branch, the PAYE-employers inspection section, the VAT inspection unit, the construction industry section and the joint Revenue-Social Welfare investigation branch all make an impact in combating tax evasion and avoidance.

Tomás Mac Giolla

As I am sure the Minister is aware, little is known about the black economy and who is involved in it. Would the Minister inform the House if personnel of the special inquiry unit are engaged in field work to discover companies involved in the black economy and companies they did not know existed? How do they intend to discover these companies?

Mr. A. Reynolds

The investigations branch is staffed by inspectors and accountants who specialise in anti-evasion work. I have no doubt the Revenue Commissioners keep very close to their chest the manner in which they carry out special investigations and the criteria they employ. They employ accountants to help inspectors in carrying out the work the Deputy has referred to.