Monday 20 August 2018

Revenue targeting credit card payments in tax blitz

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In the last decade, acquisition of a credit or store card has simply followed the click of a button to submit an application form
Paul Melia

Paul Melia

THE Revenue Commissioners are to probe millions of credit and debit card transactions as part of a crackdown on businesses evading tax.

Data from companies which process transactions will be used for the first time to investigate if payments are being declared to the taxman, the Irish Independent has learned.

The move comes as new figures show that more than 2,000 companies and individuals have made settlements with Revenue over the past five years, after failing to declare they had a tax liability.

An analysis of published settlements reveals that the average sum was €215,415 - but that the largest 'average' was in Monaghan, at €316,321.

A spokesman said the latest blitz involved comparing so-called 'merchants acquirers' data gleaned from companies which process payments 
against turnover reported to the taxman.

If the figures did not match, it would "raise a concern" and could result in a business being audited.

Some €28bn was spent on credit and debit cards last year, figures from the Irish Payment Services Organisation (IPSO) show, involving more than 341 million transactions. Some 5.5 million cards are in circulation.

The spokesman said tax bills could more than double if evaders did not co-operate with inquiries, because interest and penalties of up to 100pc could be added to the liability if disclosures were not made.

"Using third-party information and data has been a particular strategy of ours for many years," said Seamas O Cathasaigh, principal officer in the planning division with responsibility for compliance.

The information was analysed and compared against tax returns, he said, to identify high-risk individuals. "If it doesn't seem to fit it will raise a concern. It's a relatively new power, and it's something we're looking at at the moment.

"It doesn't say because you show up that there's anything wrong, it just gives us information. The more of that stuff we have, and the more out of sync your return is, the higher your risk ranking is.

"It might appear a business would have only one merchant acquirer dealing with their credit cards, but there may be two or three. The question then is, if you have more than one, are you declaring all the returns?"

The chief executive of the Irish Small and Medium Enterprises Association, Mark Fielding, said the black economy was believed to be worth as much as 16pc of GDP - or €25bn - and that the Hidden Economy Group which included Revenue, government departments, business and trade unions, was deeply concerned.

"It would be one of the things we've been banging on about in the Hidden Economy group. We have no problem with cross-checking and the legitimate operators have no problem with this.

"The black economy has never been as big as now, it's a major issue. It's everything from smuggled cigarettes to payments under the counter. It's booming at the moment."

Revenue uses the powerful REAP (Risk Evaluation Analysis and Profiling) System to identify potential defaulters.

It uses more than 50 separate data sources, which range from registrations of landlords with the Private Residential Tenancies Board and interest payments from banks over a certain threshold, to payments made by state agencies or trading licences issued.

The data is cross-checked against tax returns made, and attaches a risk ranking to each taxpayer.

"We are always on the horizons scanning," Mr O Cathasaigh said. "If we think there's a risk in a particular sector we might decide to audit."

Companies with a liability which made Revenue aware of the issue would pay less penalties. He also said that individuals or companies making claims for tax refunds were also assessed, for example if they were making returns for large medical expenses which had not arisen before.

Irish Independent

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