Introductory Comments by Mr. Frank Daly, Chairman
Introduction
Ladies and Gentlemen I would like to welcome you here for the publication
of our Annual Report for 2003 which I presented to the Minister for Finance
earlier today. Before we begin I would like to introduce my two colleagues
on the Revenue Board - Commissioner Josephine Feehily and Commissioner
Michael O'Grady. This is Revenue's 81st Annual Report.
Format
We have again followed the approach adopted last year in which we designed
our Annual Report to report closely on progress in implementing our Strategy
Statement.
Once again, our Report highlights not just successes in meeting targets but also records areas where performance needs improvement.
I would now like to make a few comments on the substance of the Report itself and bring you up to date with developments in some areas which may be of particular interest to you. Afterwards, we will be happy to take any questions which you may wish to raise.
Review (Pages 6-7)
For us the year 2003 was dominated by two main developments. We started what was to become a wide-ranging investigation into tax evasion involving offshore accounts and investments. I will bring you up to date on developments in that investigation shortly. It was also the year in which we completed the most far reaching restructuring of the organization ever undertaken. These developments presented exceptional challenges to us but, despite this, we also made significant progress on the main items on our business agenda. In a nutshell the vital signs are good:
- We collected over €43 billion in gross revenues.
- We made substantial progress on our special investigations - (Bogus Non Resident Accounts; Ansbacher; CMI/NIB and our most recent initiative on Offshore Accounts ) - I will give you the most up to date yield figure for these later.
- Revenue audits yielded €428 million.
- We again reduced our debt - arrears as a proportion of gross collection is now at a record low of 3.1%.
- On the Customs front we seized drugs worth €21 million and detained over half a million € in suspected drug-related cash. We also seized almost 52 million cigarettes and 4,238 kg of tobacco.
- Over 40% of income tax self-assessment returns were made through ROS - the Revenue On-Line Service. More than €6 billion was paid through ROS. Another €2.9 billion was paid using direct debit.
The main features of the year are set out at pages 8 and 9 of the Report.
Let me take you briefly through some of these and update you on some topical
matters as we go.
Receipts (Pages 12 - 17)
Tax and duty receipts again reached record levels. Gross receipts were
over €43 billion, over €3.7 billion ahead of 2002, while net
tax and duty receipts reached €32 billion, almost €3 billion
ahead of the previous year.
The scale of our tax collection operation might best be illustrated by
highlighting a couple of figures for you. The daily payments to the Collector
General's Office during 2003 averaged €143.6 million while the largest
amount lodged on a single day was €1.25 billion.
Debt Management (Pages 20-21)
We continue to effectively tackle outstanding debt. This figure is now
at 3.1% of collection - down from 3.3% in the previous year and a new
record low.
It's worthwhile remembering where we were on this - in 1988 the debt figure
stood at 37% of collection (when gross receipts were only one third of
what they are now); just 5 years ago the debt figure was at 6% (when gross
receipts were only two thirds of what they are now.).
In money terms the debt figure at the end of May is €1.25 billion
- down from €1.32 billion in 2002 even though gross collection increased
by €3.7 billion. In the text of the Report you will see that we have
brought forward the reporting date for our debt to 31 March for this and
future reports.
Taxpayer compliance increased very satisfactorily in 2003, largely due
to a continued focus on maintaining the timeliness of payments.
The amount of debt written off in the year was €119 million, in comparison
to €178 million in the previous year. This reflects our continuing
determination to eliminate debt that is more than 6 years old and to have
75% of debt less than three years old.
Prosecution (Pages 24-28)
- Our new Investigations and Prosecutions Division works closely with the new Revenue Regions and Large Cases Division to provide a forceful and effective focus on tax evasion, smuggling and other breaches of Revenue law.
- In 2003 we published the names of 1,257 defaulters in connection with audit settlements amounting to €133.91 million.
- There were seven convictions for serious tax evasion with 38 cases under active investigation at year-end.
- Cases involving 25 individuals and companies were referred to the DPP for directions in connection with serious tax and duty evasion.
- There were 627 convictions for failure to file tax returns, 169 convictions for unlicensed trading, 145 convictions for marked mineral oil offences, 65 convictions for smuggling and seven convictions for Vehicle Registration Tax offences.
Collection Enforcement (Page 22-23)
Despite very active collection compliance work and improving due date
payment figures we still have to resort to the more robust forms of collection
enforcement in difficult cases.
In 2003:
- Enforcement procedures through solicitor, sheriff and attachment yielded more than €195 million from more than 43,000 cases.
- Bankruptcy proceedings were initiated against two individuals.
- The High Court was petitioned on 15 occasions to appoint liquidators to wind up companies. In addition 24 'Phoenix' companies either ceased trading or liquidated voluntarily. Some 563 companies were being monitored as 'phoenix' operations at year's end.
Audit Activity (Page 33 - 37)
- 16,000 audits were carried out yielding €428.65 million, a substantial increase of €160 million on 2002. This included €63.95 million paid on account.
- In 55 of these cases the liability exceeded €1 million.
- A significant feature of the 2003 audit programme was the number of Bogus Non-Resident account cases (3,910 with a yield of €138.78 million).
- In the course of the audit programme 32 cases were identified for possible investigation with a view to prosecution.
Customs and Excise (Pages 28 - 31)
This was another successful year in the battle against illegal drugs and other contraband.
- Drugs with an estimated street value of almost €21 million were seized and €582,000 of suspected drug related cash was detained.
- Almost 53 million cigarettes were seized. There were also nine detections of oil-laundering plants saving the Exchequer approximately €9 million per annum.
Customer Service (Pages 40 - 46 )
In 2003 we implemented the most significant restructuring in the organisation's history while, at the same time, we ensured that our core business was not adversely affected. While there was slippage in meeting some of our customer service standards, overall results for 2003 compare favourably with previous years.
The Revenue On-line system goes from strength to strength. ROS has been enhanced to include new services in the areas of Relevant Contracts Tax, Capital Acquisitions Tax, New Customs Transit System and VAT on services, to name a few. In 2003 40 percent of all income tax self assessment returns came in through ROS. It is also a major success in other areas such as vehicle registration tax where 70% of all eligible motor vehicles are now registered on-line.
Special Investigations
Revenue is currently involved in a series of special investigations with
which most of you will be familiar. The 2003 position on these is given
in the Annual Report but I'm sure you will be interested in the most up
to date position.
Bogus Non Resident Accounts (Page 27)
You will remember that we had recovered €222 million from 17 financial
institutions as a consequence of the look-back audits in 2000 and that
3,675 individuals had paid us €227 million under the November 2001
Incentive Scheme.
Subsequently (as we had promised) we began to tackle those who did not
come in voluntarily under the Incentive Scheme. As of today that ongoing
investigation has identified 8000 individuals who had not come forward
and we have recovered €302 million in tax, interest and penalties
from these individuals. Total receipts from the BNR investigation now
stand at €751 million.
Clerical Medical Insurance/National Irish Bank (Page 25)
The total number of cases in this investigation is 452. As of today we
have concluded our investigations in 404 cases. Of these, 291 were settled
with payment of €50.4 million in tax, interest and penalties. 113
were finalised with no liability arising. The remaining 48 cases are the
subject of ongoing investigation. Three cases were prosecuted, with fines
being imposed in two of them and a suspended prison sentence imposed in
the third.
Ansbacher (Page 25)
Revenue has been engaged in this investigation since late 1999, enquiring
into 289 cases. We have concluded settlements with 72 cases and a further
50 cases have made payments on account. The total amount recovered in
tax interest and penalties amounts to €42.79 million. I indicated
last year that progress on this particular investigation would be difficult
- so it is - albeit that this time last year we had recovered only €23.64
million and only 11 cases were finalised. However our recent success in
the High Court in gaining access to the supporting papers of the High
Court Inspectors will be of considerable value.
Offshore Assets Group (OAG) (page 26)
You may recall that this time last year we announced our intention to
tackle the use of offshore accounts and structures by Irish taxpayers
for the purposes of tax evasion. We gave details at the time of a breakthrough
in relation to an investigation into trusts managed by an Irish Financial
Institution in Jersey. Subsequently we conducted separate investigations
during 2003 in relation to some Isle of Man activities.
The background to the current more wide-ranging "offshore" investigation
is that in December last I met the Chief Executives of 10 Irish financial
institutions with subsidiaries or branches outside the State. I informed
these Chief Executives that a wide-ranging investigation into holders
of offshore accounts and other financial investments would be started
early in 2004 - using all available Revenue powers. We sought the cooperation
of the financial institutions concerned and requested that they write
to their Irish resident customers with accounts in their offshore subsidiaries
and branches, advising them of the impending investigation and of the
benefits to be obtained by making a disclosure of unpaid liabilities before
it commenced.
I am pleased to say that all of the financial institutions concerned co-operated
in this exercise.
The original deadline for making a voluntary disclosure was 29 March
2004 with the submission of final computations and payments due to be
made by 28th May. In response to requests from tax practitioners, accountants
and other interested parties we agreed to extend the deadline to Thursday
last, 10th June.
As with most initiatives that have deadlines, the majority of people only
respond close to the end dates so we are still some way from a final figure
for this phase of our investigation. I can however confirm that
by end March we had received 15,000 notices of voluntary disclosure and
as of this morning payments amounting to just under €500 million
have been received from approximately 11,000 individuals. We confidently
expect this figure to increase further in the coming weeks. We also of
course expect that there will be further significant recoveries as we
move into the post voluntary disclosure phase of this offshore investigation.
Last year when I spoke about the beginnings of these offshore investigations
I said that the sum of €8 million had been paid on account. One year
later the aggregate figure collected so far from these offshore
investigations is almost €650 million. This represents a
very satisfactory outcome to this initial phase of our investigations.
We are now following up with determination those who did not come forward
voluntarily. In the Bogus Non Resident account investigation Revenue stuck
to its promise to go after those who did not avail of the Voluntary Disclosure
opportunity and these people have now paid more than twice as much as
they would have paid had they believed us in the first place. In addition,
their settlements with Revenue, including their identities, were published
in the media.
Those who chose not to avail of the voluntary disclosure option in the
offshore investigation will face a similar determined approach on our
part. We will identify them and apply the full force of tax law to dealing
with them.
Our new Organisational Structure (Page 8 - 9 and Appendix 1)
Finally I would like to refer to the restructuring of Revenue which was
completed during 2003. It is designed to provide a more cohesive, efficient
and effective organisation and it is already beginning to do that. Our
resources are now aligned to profile and manage our customers on a more
coherent and logical basis. The implementation of this new structure is
the most significant change programme ever undertaken in Revenue. It has
taken place against the backdrop of a very successful year in all of our
core business areas - as I have been outlining above.
Conclusion
Our work is vital to the running of this country and the well being of
its citizens. We collect the money that funds 94% of Government expenditure,
we contribute to keeping society protected from drugs and we do our bit
to help business and economic development.
We are determined that what we are asked to do we will do well and this Report is our view of how we did in 2003.
Every year we thank our staff for consistently delivering on the high performance targets we set for ourselves and for their adaptability in coping with constant change. The changes we faced over the past seven months, with the transition to our new structures, were of a different order of magnitude to anything that went before.
In particular, the front-line staff in our customer service areas have borne the brunt of these changes and they deserve special thanks for their huge efforts in bringing us through this difficult and challenging period.
We would now be happy to take any questions you might have.