Vol. 557 No. 1
127 Ms McManus asked the Minister for Finance his views on the Institute of Taxation contention that a new code for tax inspection audits effectively introduces a penalty amnesty for tax fraud; and if he will make a statement on the matter. [21286/02]
I assume what the Deputy is referring to is the regime for mitigation of civil penalties documented in the new code of practice for Revenue auditors. Revenue's approach to penalty mitigation and prosecution as set out in the code could not by any means be described as an amnesty.
The Revenue Commissioners are empowered to mitigate penalties under the provisions of section 1065 of the Taxes Consolidated Act, 1997. This mitigation power has been part of the tax code for many years. In the context of Revenue audits, the code of practice provides clear guidelines as to how civil penalties should be mitigated by Revenue auditors depending on the nature of the particular tax default involved.
The code essentially provides for different levels of mitigation for different degrees of default. This replaces the "one size fits all" scheme of penalty mitigation which had applied in the previous code and in some instances is less favourable and in some instances more favourable than previously applied. The most serious defaults, those categorised as "deliberate default", qualify for the smallest level of mitigation; the least serious, classified as "insufficient care", receive the largest mitigation.
In relation to serious tax fraud, this is defined in the code as the making of a false representation by a taxpayer knowingly, without belief in its truth, recklessly, or careless as to whether it was true or false.
The code provides that cases of suspected serious fraud, where a sustainable case is likely to exist, should be referred to Revenue's prosecutions division to evaluate suitability for possible prosecution. It also lists the criteria used in determining whether or not a case is suitable for investigation with a view to prosecution.
