The Revenue Commissioners Offshore Assets Group's forthcoming investigation of Bank of Ireland's customers with trusts in Jersey is part of a wider examination of all foreign deposits and property owned by Irish residents.
The group, which was established last year, will begin an investigation into trusts owned by around 400 Bank of Ireland customers in Jersey on June 1st. A spokesman said the group would also be looking at any funds held in offshore banks and income streams from assets such as property, accruing to Irish residents, in the months ahead.
In an unusual move, Bank of Ireland wrote to its Irish customers warning them about the forthcoming scrutiny of their affairs and highlighted the financial benefits available to them if they made a full disclosure beforehand. The Revenue has told the bank that customers who make a voluntary disclosure by the end of May will be entitled to "significant benefits".
These include the reduction of penalties on the amount of tax owed from 100 per cent to 3 per cent to 10 per cent. Customers who come forward will not be prosecuted and their names and details of their tax settlements will not be published in the Revenue's tax defaulters list.
Yesterday, Labour Party leader Mr Pat Rabbitte said he would be raising the issue with the Revenue chairman, Mr Frank Daly, when he attends the Dáil Committee of Public Accounts next week. "I hope to get clarification from the Revenue Commissioners in relation to the claims that tax impropriety may surround Bank of Ireland's Jersey-based trust operation. One logical inference from the bank's own letter to its clients is that the bank itself is uncertain about the tax compliance status of some of its customers.
"Given the experience of recent years, Bank of Ireland should make clear whether some of these trusts were facilitating tax evasion as distinct from legal tax avoidance," Mr Rabbitte said.
Bank of Ireland has said there is no reason to believe that people have a liability, but that they were entitled to be told about the Revenue investigation. Yesterday it emerged that the bank is closing an operation in the Isle of Man which offers offshore deposit facilities to Irish residents through its F-Sharp banking division. The bank said it was very expensive to operate.
A Revenue spokesman would not comment on whether other Irish banks with businesses in Jersey have also been informed about the investigation.
This inquiry will examine the source of the funds deposited in these trusts as well as any monies that have been distributed to beneficiaries to determine whether taxes have been evaded.
The action group for bogus non-resident account holders has criticised the bank for tipping off its wealthiest customers ahead of an investigation to allow them to reduce their eventual settlement.
To date, the Revenue has collected €606 million in unpaid taxes, interest and penalties from individuals who owned bogus non-resident accounts.
