Profiling and a detailed understanding of particular business sectors are key weapons for officials from the Revenue's Large Cases Division, writes Colm Keena

A robust response to "aggressive" tax avoidance schemes was a central pillar of Irish tax compliance strategy, top Revenue official Mr Seán Moriarty explained yesterday.

In a detailed paper delivered to yesterday's conference at Dublin Castle, Mr Moriarty said the taxation of business was a key factor in the Revenue's operations.

He also said tax avoidance was something that was most aggressively pursued in the upper echelons of business.

Mr Moriarty is a senior Revenue official in charge of the Large Cases Division.

The 1999 DIRT inquiry heard that he wrote a internal paper in 1992 outlining what he thought could be done to tackle the bogus non-resident account situation. His suggestions were not taken up.

Yesterday, Mr Moriarty said the creation of the Large Cases Division occurred as part of the restructuring of the Revenue during 2003.

He said the changes occurred against a backdrop that included "public and political concern about Revenue's capacity to confront a culture of serious tax evasion, a small but growing part of which was traceable to organised crime".

The key role of business in the collection of various taxes was recognised, he said, as was the key role of tax advisers.

He said organising the Revenue so that all tax aspects from an individual source were assessed by a particular unit allowed it focus on the compliance of individuals and companies "rather than on the symptoms visible to different caseworkers dealing with different aspects".

The Large Cases Division was set up to influence compliance by large business and by very wealthy individuals. It has 240 staff.

Units within the division were building up "deep knowledge" of various business sectors, of high net worth individuals, and of counter avoidance, he said.

The national programme to confront tax avoidance was located in the division because of the "relatively high incidence of schemes of avoidance among larger cases".

Mr Moriarty said there were 250 people worth more than €50 million and 343 companies and partnerships with annual turnovers of more than €125 million.

These were all being dealt with through the Large Cases Division. All companies and partnerships involved in banking, insurance and pensions are also being overseen by the Large Cases Division. The division had been busy profiling its clients since last autumn.

It had been "bringing out a total picture of corporate structures and blending in business intelligence and case histories of previous Revenue interaction with the taxpayer.

"From this data, and from discussions with the taxpayers and their advisers, first risk profiles are being built."

"This profiling is also seeking to capture the overall business strategy, both nationally and globally, and to understand where tax strategy fits with business strategy and particularly where it is divorced from business strategy - this is the key to the detection of aggressive avoidance."

Mr Moriarty said ongoing investment was building up Revenue's skills in areas such as computer auditing and forensic auditing.

Recruitment of specialists from outside the Revenue is also being examined.

Business-unit managers from the Large Cases Division are meeting with senior management in large business enterprises to discuss compliance and related issues.

"We are making a very strong plea to senior management of large business to adopt non-aggressive, socially responsible attitudes to tax planning and alerting them to the priority we are giving to detecting and countering aggressive avoidance."

The division is also working on audit and investigation programmes. These include building up separate risk profiles for each large case and for each business sector across all taxes and customs.

"Specialist knowledge of business sectors and of high wealth individuals is allowing much more informed audit," he said.

"Revenue has made it clear that its most important initial target in the large case area is aggressive avoidance."

The division is considering moving towards more real-time audits, such as when mergers or acquisitions are taking place. This would allow tax planning decisions to be influenced at the time they are taking shape, he said.

Direct dialogue with tax advisers was seen by the division as an important potential influence on clients, he said.

"Tax advisers have recently been expressing concern about the Large Case Division programme of direct dialogue with large business management. We have, however, insisted that this parallel line of communication with business is a crucially important part of our strategy, which need not undermine the role of the adviser."

He said the fear of being caught and being publicly identified as a tax defaulter encouraged compliance. "This fear is particularly real for large cases, that often have listings on the stock exchange or are subsidiaries of foreign parents which do not wish to attract negative publicity."