As a result of recent tribunals, freeing up of Revenue staff as taxpayers increasingly use online services and the incentive to maximise tax revenues without increasing tax rates, the number and depth of investigations increases.
Current Investigations
Credit Unions Interest Reporting
Persons who have undeclared tax liabilities in relation to accounts which in aggregate held €100,000 or more at any time during the years from 2005 to 2008 and who failed to avail of the disclosure initiative are precluded from making a voluntary disclosure if a full payment and disclosure was not made on or before 31 March 2010.
Where follow-up enquiries identify taxpayers with undeclared liabilities associated with accounts which in aggregate held €100,000 or more at any time during the relevant years they will face additional penalties and where the settlement exceeds €12,700 for periods up to 2004 or €30,000 for later periods they will be published in Irish Oifigúil. They also may be subject to criminal investigation.
Deposit Interest Reporting
Taxpayers who had €100,000 or more in aggregate in DIRT liable deposit accounts (which included funds not previously declared for tax) at any time between 1 January 2005 and 31 December 2007 had until 15 September 2008 to make a voluntary disclosure to the Revenue Commissioners. Revenue has since received names and address of account holders where interest in excess of €635 was paid for 2005, 2006 and 2007.
Where follow-up enquiries identify taxpayers with undeclared liabilities associated with accounts which in aggregate held €100,000 or more at any time during the relevant years they will face additional penalties and where the settlement exceeds €12,700 for periods up to 2004 or €30,000 for later periods they will be published in Irish Oifigúil. They also may be subject to criminal investigation.
Life Assurance – Undisclosed Funds Invested in Life Assurance Products
In April 2005 Revenue launched an investigation to identify persons who invested untaxed funds in single premium insurance policies. Following on from an examination of the information received from the initial phase of the investigation Revenue decided to look for further High Court Orders in respect of policies where the total amount invested was greater than or equal to €20,000 but less than €50,000.
Policyholders with outstanding tax liabilities who receive a letter from an insurance company and did not come forward by 30th November 2009, should be aware that Revenue will use all of the relevant powers provided in the Finance Acts to vigorously pursue them for their undisclosed and unpaid liabilities, as has been successfully done in other underlying tax projects.
They will in addition to the imposition of substantial interest and penalties, and publication, face the prospect of being selected for investigation with a view to the initiation of criminal proceedings.
Offshore Assets – Offshore Related Tax Defaults
The Offshore Assets Group continues to investigate taxpayers who failed to come forward in the qualifying disclosure campaign during 2004. Over €910 million in tax, interest and penalties has been collected from circa 15,000 individuals
Revenue has, on foot of High Court Orders, obtained transaction information from financial institutions, which is assisting in identifying those individuals who held offshore accounts or financial products and who have not brought their tax affairs up to date.
The Offshore Asset Group continues to issue letters to these individuals inviting them to make contact with a view to regularising their tax affairs.
Trusts & Offshore Structures
The Revenue investigation of the tax treatment of property, assets and funds settled by persons on trusts and offshore structures commenced 1 September 2009.
The investigation is focused on persons who have undeclared tax liabilities in respect of transfers and settlements of property, assets and funds to / on trusts and offshore structures, such as, foundations, establishments, trust enterprises and offshore companies or have tax issues in relation to profits or gains arising within, or disbursements out of, such trusts or structures.
Investigations can be stressful, focusing taxpayers’ attention away from the success of the business. At BDO we have a team of people who have many years’ experience working in this area.