Thursday 14 November 2019

Revenue gets sweeping new power to target tax defaulters

Chairman of the Revenue Commissioners Niall Cody
Chairman of the Revenue Commissioners Niall Cody

Colm Kelpie

Sweeping new powers have been granted allowing tax officials to access private financial information about an individual without even telling those affected that the probes are happening.

With court approval, tax authorities will be able to secure information from bodies such as banks or other third parties without the suspected tax defaulter knowing.

Separately, Revenue will also be given extra powers to search premises, vehicles and computers, including mobile phones, for information which may be of value in the investigation of excise offences.

And Revenue will also have extra powers to deal with those trying to avoid capital gains tax by transferring assets to controlled companies abroad.

The measures aim to beef up the Revenue Commissioner's ability to clamp down on suspected tax evaders.

Tax officials are already allowed to seek a High Court order requiring a bank or other body to provide information about a taxpayer it has suspicions about.

But in the new Finance Bill, published yesterday, Revenue will be able to seek information even if it does not know the identity of the suspected tax cheat. It will now also have the power to ask the court to direct that the taxpayer is not told about the disclosure order.

The Bill states that where such an order is made, the Revenue Commissioners must have "reasonable grounds" for keeping the process secret in order to ensure tax collection.

It is part of a series of measures designed to help boost Revenue's ability to tackle suspected tax evaders.


Revenue will also be given strengthened powers to look at the transfer of assets abroad. It will be allowed to look through the non-resident company to establish which of those involved in it are resident here and, subject to exceptions, assess whether they're liable for capital gains tax on their share of the gains made by the company.

Other measures in the Bill this year include allowing staff to receive non-cash bonuses or benefits from their employers up to the value of €500. The current limit is €250.

The Bill also provides for an exemption from USC on employer contributions to a PRSA, to bring the USC treatment of such contributions in line with employer contributions to occupational pension schemes.

It introduces a Petroleum Production Tax, to ensure that discoveries made under future exploration licenses will result in an increased financial return to the State and at an earlier point in time. It will replace the Profit Resource Rent Tax which was introduced in Finance Act 2008.

Another measure means that up to 5,300 Irish shareholders with Standard Life will avoid income tax on a share payout after a postal issue delayed their return of value forms. Those affected will now have their payment treated under capital gains tax rules.

The Bill also deals with a new fuel grant to members of the Disabled Drivers and Disabled Passengers Scheme.

The grant replaces the excise duty repayment on the fuel element of the Scheme which was ruled incompatible with the EU Energy Tax Directive by the European Court of Justice.

The Revenue Commissioners said the elements in the Finance Bill allowing for information to be sought without the taxpayer's knowledge reflects the fact that on occasion, when a foreign tax authority requests Revenue to seek and exchange information from a third party or financial institution about a taxpayer, the foreign authority may also request that the relevant taxpayer is not notified where they consider that to do so could compromise their investigations.

"Example, the taxpayer might destroy the paper trail or dissipate assets etc. International best practice is that a taxpayer should not be informed in such circumstances," Revenue said.

Revenue added that if it requests that the information to be handed over is not disclosed, the application " can only be made where Revenue has reasonable grounds for suspecting that such disclosure could prejudice the proper assessment or collection of tax, including foreign tax."

Irish Independent

Also in Business