Life Insurance Investment Products Investigation
The deadline of 22nd July for the Insurance Products Investigation has now passed and Revenue can report that the outcome to date of the voluntary phase has been very successful: 4,600 taxpayers have paid €312 million to date (27/07/05).
Further payments relating to this phase are expected in the coming months, as an extension of the deadline is sought in individual cases.
Revenue will be following up in those cases (about 3,500) where a notice of intention was given but no further communication was received.
In the second stage (the follow-up investigation stage) which effectively commenced immediately after the May deadline had passed, Revenue continues the business of identifying all those who used such products for tax evasion but did not make voluntary disclosures.
Revenue investigators are currently engaging with the Insurance Companies in relation to the sampling exercise provided for in Section 140 Finance Act 2005. The information obtained from this work, together with that gleaned from the voluntary disclosures and other sources, will support applications to the High Court for orders seeking information from insurance companies.
It is not possible to estimate the yield that will result from the second phase of this investigation.
The success of the Special Investigations approach is now well established and recoveries now exceed €2 billion.
Ends 27/07/05
Additional Information
Background
On 11 April Revenue announced that a major investigation would be carried out into the use of life assurance investment products for the purposes of tax evasion. This decision arose from intelligence gathered from a number of sources including information which arose during the course of the Bogus Non-Resident and Offshore investigations and followed a period of research and discussions with the insurance industry.
We announced that the investigation would be advanced in two stages (voluntary disclosure and follow-up investigation phases) using a similar approach to that successfully used in the Bogus Non-Resident Account and Offshore Assets investigations.
Voluntary Disclosure Phase
In the first stage (the Voluntary Disclosure stage) taxpayers, who invested undisclosed and undeclared funds in life assurance products were given until the 23rd May 2005 to give notice to Revenue of their intention to make a disclosure and to follow up with the actual disclosures and payment of the outstanding liabilities by the 22nd July 2005. In doing so they would benefit from reduced penalties, settlement details would not be published and they would not face the prospect of prosecution. Notices of intention were given by or on behalf of about 10,000 taxpayers and in some cases the notice was described as a precautionary/protective one. At this point about 1,600 of these cases have indicated that no additional liability arises.
Extensions to 22nd July Deadline
Extensions to the 22nd July deadline may be granted to individual taxpayers where, for example, additional time is required for taxpayers to access information critical to the calculation of liabilities or to realise assets to pay some or all of the liability.
Follow Up Investigation Phase
In the second stage (the Follow Up Investigation stage) which effectively commenced immediately after the May deadline had passed, Revenue has commenced the business of identifying all those who used such products for tax evasion but did not make voluntary disclosures.
As part of this process Revenue has already engaged with representatives of a number of life assurance companies in relation to the new sampling powers provided in the Finance Act 2005. The remaining companies will be engaged shortly. At all times the Insurance Industry Federation has given assurances to the Revenue representatives that the industry will fully co-operate with the Revenue investigation as the law requires and this has been the experience to date.
The information that will be ascertained in the course of this work, together with that obtained from the voluntary disclosures and other sources, will support applications to the High Court for orders seeking information from insurance companies in relation to policies and policy-holders, with a view to identifying taxpayers who have used life assurance products to conceal funds that have not yet been disclosed or declared for tax purposes.
Offshore Accounts Investigation Update
The follow up phase in the Offshore Accounts investigation is now well under way. We have to date obtained five High Court orders against financial institutions relating to transfers to and from their offshore subsidiaries. The information in relation to one of these orders is currently being provided to Revenue and in relation to the other four is being collated by the financial institutions concerned and will be passed to Revenue in due course. Further applications to the High Court are being prepared and one of these will be heard before the current term ends.