As the House is aware, the Revenue Commissioners announced a statement of practice on 2 May 2001 on underlying tax on funds deposited in bogus non-resident accounts. Under the terms of the statement, Revenue indicated that they are setting a deadline of 15 November 2001 for bogus non-resident account holders to make a voluntary disclosure and pay the tax along with interest and penalties.
I have answered a number of parliamentary questions in the past six month or so confirming to the House that Revenue was preparing guidelines on the issue. In this regard, I was aware that Revenue was pursuing its deliberations on the matter. The chairman of the Revenue Commissioners informed me of the course of action that they had decided on and advised me before the recent announcement that they would be issuing a statement of practice on the underlying tax on funds deposited in bogus non-resident accounts. My approval for this course of action was not required as this falls within the ambit of responsibility of the Revenue Commissioners.
The Revenue Commissioners are charged under tax law with the assessment and collection of taxes and levies imposed by the State. They are also entrusted by law with the duty of manag ing the process in an efficient manner to secure the moneys for the State. This involves the making of judgments on an ongoing basis as to the best way to carry out their functions to discharge their responsibilities.
Those disclosing voluntarily will have to pay full tax owed. They will also have to pay interest and penalties up to 100% in order that no more than twice the tax due will be paid. The arrangement in the statement of practice falls within Revenue's care and management powers principally under section 849 of the Taxes Consolidation Act, 1997, which allow it to deploy its resources to best effect in collecting taxes.
I understand from the Revenue Commissioners that those who availed of the Waivers of Certain Tax, Interest and Penalties Act, 1993, may also avail of the arrangements under the statement of practice. This does not apply to cases already under inquiry by Revenue on 2 May 2001 or coming within the scope of the Ansbacher investigations, the Flood tribunal or the Moriarty tribunal. Persons who did not properly avail of the 1993 Act will pay much higher amounts now if they come within the scope of the statement of practice.
It has been clear for some time that the necessary job of pursuing the underlying tax due on income held in bogus non-resident accounts would be a mammoth task. There could be between 25,000 and 50,000 such account holders with arrears. To pursue each and every one of these solely on a case working basis would absorb considerable time and resources which would be drawn away from the ongoing work of collecting more than £23 billion in current taxes in 2001 alone.
Additional InformationThe proposed approach is the most practical and effective way of dealing with the task, which is unprecedented in terms of scale. The sub-committee of the Committee of Public Accounts on DIRT recognised the practicalities of the situation and recommended in its final report of 30 March 2001 that the Revenue Commissioners “give consideration to dealing with the assessment and collection of the underlying tax in a pragmatic and effective manner while safeguarding the overall tax revenue of the State.”
This is sensible advice from sensible people which has been acted upon.
