Offshore trusts probe bigger than Ansbacher, say Revenue experts
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THE Revenue Commissioners now believe the special investigation into trusts and offshore structures will be "bigger than Ansbacher" after early groundwork showed the 200 trusts already identified "may very well collapse".
The commentary comes ahead of the September 1 cut-off date for people to notify Revenue of their intention to make a disclosure on any tax liability linked to trusts and other off-shore structures.
Anyone who makes a disclosure before the formal investigation begins on September 1 will benefit from a "substantial mitigation of penalties", confidentiality and non-prosecution, the Revenue said.
Ahead of that date, the taxman has spent the summer months trawling through extensive information provided by financial institutions and professional advisers on foot of a High Court order and recent legislation.
The Revenue has also been in touch with more than 100 non-resident banks and financial institutions setting out the information they must give about funds and assets transferred overseas by Irish residents from December 24, 2003.
"We've identified over 200 trusts and offshore structures," said Denis Holligan, principal officer with Revenue's investigations division. "The early analysis indicated that these trusts and structures may very well collapse."
Asked about the scope of the investigation, Mr Holligan said it would be "bigger than Ansbacher" since the new probe focused on all banks and financial institutions, whereas the famed Ansbacher investigation was limited to just one bank.
Mr Holligan said trusts were used by a "wide range of people", from ordinary residents to the super-rich. In legitimate trusts, "the overseas trustee should have complete control, and make all investment decisions", he said.
"We've looked at it, and lo and behold there are Irish residents who are dictating how the money is invested and what comes out of it, where the non-resident trustee has only nominal control," said Mr Holligan. "That is a sham trust."
Revenue considers these sham trusts a high tax risk, since they are attractive to those who want to conceal their wealth from Revenue to avoid paying tax. Anyone found to be using trusts to that end will be liable for tax from when the trust was set up, Mr Holligan said.
"The use of trusts and similar special purpose vehicles has always been cloaked in secrecy," Mr Holligan added. "The combination now of Revenue Powers and intelligence gathering and tax information exchange arrangements mean the scope for escaping tax through trusts is diminishing."
- Laura Noonan
