Opening Statement by Revenue Chairman Josephine Feehily to the Public Accounts Committee, 26th February 2009
Thank you Chairman and members of the Committee for the opportunity to make this short Opening Statement, and I will begin with Chapter 3.8.
Prosecutions for criminal tax and Customs & Excise offences are managed by a dedicated Revenue Division – the Investigations and Prosecutions Division. Criminal investigation is a resource intensive activity which normally takes a number of years before a case reaches the Courts. In 2007 there were 9 convictions for serious tax evasion and (suspended) custodial sentences were imposed in 4 cases. In relation to the current status of the 82 cases referred to in the C&AG's Report the Committee will be interested to hear that 15 convictions (including 2 associated cases) have now been obtained which will help make 2008 our most successful year ever in terms of criminal convictions.
While the chapter doesn’t refer to it, it is important to say that in addition to the serious prosecutions, there were 1,263 convictions for summary offences relating to the non filing of tax returns across all the taxes and on the Customs & Excise side there were 500 summary convictions for a wide variety of offences besides the five serious ones mentioned in the Report.
Turning to Chapters 3.9 & 3.10, the legacy investigations referred to in chapter 3.9 are now close to conclusion, in terms of tax yield at least. Some may well continue on for a number of years before finalisation because of court cases. The additional yield from these investigations since the C&AG reported with end of June figures was about €30m.
The Comptroller and Auditor General refers in the final paragraph of chapter 3.9 to a new investigation which had just commenced at the time of writing. This arose because Banks and Building Societies were obliged to provide us with details of accounts where interest of over €635 was paid in a year. This information was due to us in September and October 2008. We announced a voluntary disclosure initiative in May 2008, when the new regulations came into force, whereby persons with €100,000 or more of untaxed funds should come forward to avail of mitigated penalties etc. in what has now become the norm for these kinds of investigations. 1,800 notices of intention were received by the relevant date, 15 September. 1,232 of those came forward with detailed disclosures by 15 January 2009 and we have received just over €70 million from these cases. In relation to the balance of cases we received over 480 withdrawals of notices of intention where the taxpayer was satisfied there was no outstanding tax liabilities and the Notices submitted had been protective in nature. The small balance of cases that submitted Notices of Intention but did not make a disclosure or withdraw the Notice is being actively pursued.
While not mentioned in the Chapter because it is new, the Committee will be interested in the outcome of a Stamp Duty Incentive provided for in the Finance No. 2 Act 2008. This was designed to encourage old deeds to be presented for stamping before we introduce electronic stamping at the end of this year. The Incentive waived penalties on instruments presented within 56 days of the passing of the Act, so the closing date was 17 February. The yield from this Incentive was €30 million for 1960 instruments.
The Report in Chapter 3.10 also looked at the checks that Revenue put in place to prevent the risk of abuse of the various voluntary disclosure schemes relating to the DIRT Underlying Tax, Offshore Assets and Life Assurance Products and concluded that reasonable steps were taken to counter this risk. We will be taking similar measures in relation to the Undisclosed Funds in Irish Bank Accounts scheme.
Turning to Chapter 3.11, the Special Savings Incentive Account Scheme (SSIA) commenced in 2001 and finished in 2007. The onus was placed on the financial institutions or Qualifying Savings Managers (QSMs) to operate and ensure compliance with the Scheme. Revenue was given overall management of the Scheme as well as a policing role that included the power to assess and monitor QSMs' compliance with it. In relation to some of the issues raised by the C&AG, the current position is that reconciliation between Monthly and Annual Returns is now almost complete and will be finalised shortly. With regard to checks of the electronic files required to be submitted to Revenue on maturity of the scheme, all such files have now been received and checking will commence shortly. A sample of cases will also be selected on a risk basis for detailed review. I welcome the C&AG's conclusion that Revenue has over the life of the scheme carried out a reasonable level of compliance checking.
Regarding Chapter 3.12 Revenue's compliance approach to the charging of interest on late payments of taxes has evolved over the last two decades or so from a "one size fits all" approach to one that, while recognising that interest is a very effective tool to encourage taxpayers to pay their taxes in full and on time, focuses on the compliance intervention most likely to be productive in any individual case.
The improvement in compliance figures over the years gives solid support to this approach. However, as I mentioned in my evidence last week, we are finding an increase in the number of businesses coming to us looking for time to pay. We are adopting a case-by-case approach to these taxpayers, and that seems to be most appropriate in the current environment.
Chapter 3.13 deals with Benefit-in-Kind (BIK) and in particular with that relating to travel, as highlighted by an underpayment which arose in my Office. I think the Paragraph gives a fair summary of the background and there is not much more that I can usefully add other than to reiterate that Revenue management did identify the problem and self reported it to the relevant Inspector of Taxes and the Comptroller and Auditor General. Notwithstanding that, it shouldn't have happened and I apologise for the fact that it happened. Measures have been put in place to ensure that, so far as is humanly possible, something like this cannot happen again.
On the broader issue of the public sector generally, we have taken steps during 2008 to remind public bodies of their responsibilities regarding BIK and a programme of compliance checks in the public sector will take place this year.
Thank you Chairman.