- Audit
- In 2010, 11,008 audits were settled yielding €434.7 million.
Table 6 illustrates the overall audit results and the audit yield.
A total of 454,796 assurance checks, were also carried out. The yield from assurance
check activity amounted to €58 million.
During 2010, 400 cases were selected for random audit. A breakdown of the random audit
programme results can be seen in Table 7.
- In 2010, we enhanced our capability in the use of e-audit throughout our audit programme.
All auditors were equipped with the software to conduct e-audits and significant training
was delivered to auditors on appropriate techniques.
- A new Code of Practice for Revenue Audit was published in September 2010. The Code
was agreed following extensive consultation within Revenue and with the Tax
Administration Liaison Committee, who represent accountants, solicitors and tax practitioners.
The Code is a comprehensive framework for enhancing the fairness, efficiency and
effectiveness of Revenue's compliance interventions.
- Revenue is obliged under EU legislation to implement controls at the time of export of
CAP goods and to conduct an audit programme. In the audit period July 2009 to June 2010,
the commercial records of 11 selected CAP exporters were examined. Those traders had received
CAP export refunds amounting to €16.56 million in the period audited, representing
approximately 73% of the total export refunds paid by the Department of Agriculture,
Fisheries and Food.
- Sectoral Compliance
- Revenue continued its policy of targeting evasion on a sectoral basis during
2010. Projects included:
- Taxi:
There was increased communication at national and local levels with the Taxi Regulator
in 2010. Regular joint operations with the Taxi Regulator, Department of
Social Protection (DSP) and National Employments Rights Authority (NERA) were carried
out with the assistance of An Garda Siochana. As a result of these operations fines
have been issued by the Commission for Taxi Regulation, individuals who were
not registered for tax or were registered incorrectly have been registered by Revenue
and instances of individuals working and claiming benefits are being investigated by
DSP.
- Construction:
The vast majority of house building in 2010 was a one-off/single unit. All
Revenue regions use local intelligence and other information to target sites where
hidden economy activity is suspected. In the course of visits to sites, the status of
all workers/contractors engaged on the site is checked to ensure compliance with
tax obligations, and the source of materials used in the building work is checked
to ensure compliance with VAT requirements.
- Cash Businesses:
Certain cash businesses are more likely to engage in shadow economy activities
through under-reporting of turnover and profit. Many pubs & nightclubs, restaurant
and takeaways fall into this category. This spans all sizes of business from small
very significant ones. They may often pay for supplies, services and staff in
cash, which makes it difficult to follow the money trail.
- Shadow Economy
- The emphasis in 2010 was on tackling the shadow economy by a combination of
risk analysis, intelligence collation, assurance checks and outdoor operations
including audit and investigation. For certain types of businesses, specific
approaches have been devised e.g. covert and overt surveillance of business premises,
the use of third party information etc.
Many of these projects included using the Joint Investigation Units in conjunction with the Department
of Social Protection, the National Employment Rights Authority and other agencies to
combat tax and social welfare fraud and protect employment rights.
- During the year, we continued to focus on cash businesses and uncovered, inter
alia, instances of electronic sales suppression tax fraud. In 2011 we will focus again
on cash businesses with particular reference to identifying and countering the use of
sales suppression software and further expansion of e-audit, as appropriate, throughout
the audit programme.
- Revenue chairs the Hidden Economy Monitoring Group, which provides a forum for
the exchange of views and insights into combating the hidden economy. Its membership
includes representatives from Irish Business and Employers Confederation, Small
Firms Association, Construction Industry Federation, Irish Congress of Trade Unions,
DSP, NERA, Department of Enterprise, Trade and Innovation, and Revenue.
- Investigations & Intelligence Gathering
- The cumulative total recouped from the major "legacy"
investigation projects reached €2.61 billion. Details of the yield from
these Investigations are outlined in Table 8.
- An investigation into Trusts and Offshore Structures continued in 2010 and
the yield, as at 31 December 2010, was €36.6 million from 165 cases. The
examination focused on identifying undeclared tax liabilities by persons who
have transferred or settled property, assets or funds to any trusts and other
similar offshore structures.
- The automatic reporting to Revenue of interest payments made by
financial institutions operating in Ireland continued in 2010. Interest returns for
2009 were due in 2010 and details of 1,272,899 accounts were supplied.
- Payments of € 8.7 million were received in 2010 from the Interest
Reporting Voluntary Disclosure initiative. Total receipts received to date amount to
€85 million, while the number of individuals to avail of the initiative is 1,254.
- Additional powers were granted to the Revenue Commissioners in the Finance Act
2010. These included power to obtain information from the Commission for
Taxi Regulation; Power to apply to the Appeal Commissioners for consent to establish
the identity of certain persons or classes of persons from third parties; power
to obtain information from the National Asset Management Agency in relation
to transactions in property. Power was also granted for the exchange of
information between the Revenue Commissioners and the Property Registration
Authority.
NAMA is required to provide Revenue with details of each eligible bank asset
i.e. borrowers' loans and credit facilities.
Revenue is in the process of receiving information and documents from NAMA on
certain eligible bank assets and the details are being analysed to identify any
tax implications.
- Revenue's Financial Services Banking area continues to monitor and respond to
tax issues arising from the banking crisis and the restructuring currently taking
place in the sector. Our compliance programme is targeting tax risk including claims
for loss relief, bad debts, VAT and employer taxes liabilities. The audit yield
figure in 2010 was €12 million and the impact of restricted losses amounted to
€108 million.
- Our High Wealth Individuals and Professionals Business Unit initiated
enquiries into approximately 300 directors and executive/management level employees
in the six main financial institutions. Enquiries have been closed in approximately
280 of these cases and are ongoing in the balance. To date, €1.3 million in tax
has been collected from these enquiries.
- The second report, for the tax year 2008, on the restriction on the use of
certain tax reliefs and exemptions by high-income individuals was completed by
Revenue and published by the Minister for Finance in July 2010. The report
confirmed achievement of the primary objective of payment of an effective income
tax rate of approximately 20% by individuals with an adjusted income of €500,000
or more (where the restriction applied in full).
The report recorded that 423 individuals were subject to the restriction in 2008
and that the additional tax yield for the year was €39.7 million.
- The Finance Act 2010 introduced a number of significant changes to the
high-earners restriction for the tax year 2010 and subsequent years.
The adjusted income threshold above which the restriction applies in full, was
reduced from €500,000 to €400,000 while the effective rate of income tax
for individuals above this threshold was increased from 20% to 30%. The lower
income threshold at which the restriction begins to apply was reduced from €250,000
to €125,000 while the allowable amount of specified reliefs (i.e. the reliefs which
are subject to the restriction) was reduced from €250,000 (or 50% of adjusted
income, whichever is the higher) to €80,000 (or 20% of adjusted income, whichever
is the higher). A graduated application of the restriction, with the effective
income tax rate rising towards 30 %, applies between adjusted income levels of
€125,000 and €400,000.
- During 2010, 13,395 Suspicious Transaction Reports were provided to Revenue
by financial institutions and other designated bodies. 30 of these reports are
relevant to ongoing criminal investigations in tax and duty cases. Many others
have resulted in recoveries of tax and penalties which would not otherwise have
been made. Currently, the weighting of the STRs within REAP is being re-evaluated
in order to refine and enhance the iterative risk analysis model.
- Following a request made by Revenue in 2010 we received information from a
Treaty partner which gave details of accounts held in Switzerland by Irish
residents. Having cross checked the information received against Revenue's records
it became clear that some individuals had already made a disclosure to Revenue
under the 2004 offshore disclosure incentive. However, a small number of
individuals have been identified with undeclared funds and challenge letters
have issued. This is an ongoing investigation.
- At the end of 2010 a total of 4,269 cases were being monitored under our
Phoenix and Commonality programmes. The increase in the numbers of cases managed
under these programmes reflects the continuing debt challenge posed by the economic
and financial environment in which businesses are operating and Revenue's
determination to give priority attention to the highest risk cases.
- Risk Analysis
- In 2010, the REAP risk analysis model was extended to include additional 3rd
party data including Taxi Regulator data, Non-Principal Private Residence Levy
(NPPR) data and Private Residential Tenancies Board (PRTB) data.
- The system to predict potential audit yield set up by Revenue in 2009 as an
extension to REAP was successfully piloted. Further developments and refinements
are planned. The use of predictive analytics in Revenue is also being broadened
to assess liquidation and phoenix cases.
- Seizures
- Revenue's Customs Service seized 201 firearms including a general-purpose
machine gun, stun guns, tear gas/pepper spray and laser pens as well as small
quantities of assorted ammunition. In addition there was a small number of
seizures of fireworks as well as the seizure of a significant number of GSM
jamming devices, the importation of which is now prohibited by a Statutory
Instrument issued by the Commission for Communications Regulation (ComReg).
A number of detections resulted in follow up joint operations with An
Garda Síochána.
- In 2010 there were 16 seizures of goods prohibited under CITES (Convention
on International Trade in Endangered Species).
- There were 46 seizures of cash amounting to €1.7 million, mainly at airports
and ports. This money is suspected of representing the proceeds of crime
or intended for use in criminal conduct. Following such seizures, an
investigation is undertaken to establish the link to criminality with a view
to forfeiture.
24 forfeiture orders amounting to €2.2 million granted by the Circuit Court in
2010. These orders mostly related to seizures made in 2008. Forfeiture
applications in a further 20 cases, amounting to €1.6 million, were before
the courts at year-end.
|
