Lenihan gives go-ahead to new regulations on tax avoidance
The Minister for Finance has approved new regulations to crack down on tax avoidance schemes.
The new measures affect accountants, solicitors, banks and financial institutions, who are required to notify the Revenue within five working days of the details of tax avoidance schemes they are promoting to their clients.
Finance Minister Brian Lenihan said the mandatory disclosure regulations, together with the new regulations, were an important step in tackling "aggressive" tax avoidance schemes that could lead to a significant loss of taxation to the Exchequer.
"The main purpose of the new disclosure regime is to constitute an early warning system for Revenue whereby information on tax avoidance schemes that may be unacceptable can be obtained at an early stage and closed down before they can do significant damage to tax revenues," Mr Lenihan said.
The measures are not intended to stop tax advisers from offering advice to their clients in the normal way, including the use of legitimate tax incentives, according to the minister.
"It is the small minority of advisers with the propensity to devise and market aggressive avoidance schemes that are in the frame and will be affected," he said.
By requiring tax advisers to notify the Revenue of tax avoidance schemes within five days of such a scheme being marketed to clients, it is hoped that the Revenue will be able to move more quickly to shut them down.
The minister has said he may also need to look at the impact of the new rules on competition between tax lawyers and other professionals due to the recognition in the legislation of the principle of legal professional privilege between a solicitor and a client.
The new regulations follow consultation between tax advisers and Mr Lenihan and they will be included in the Finance Bill.
The minister is proposing to have an overall review of the mandatory reporting regime within two years to determine whether any further changes may be necessary.