The Institute of Chartered Accountants in Ireland has warned that new Revenue powers to prosecute those who aid and abet tax evasion could work against the risk takers who generate economic growth.
Its president, Mr Terence O'Rourke, said that such a broad extension of powers would place people seeking to use legitimate means to plan their tax affairs in jeopardy.
"There must be a clear understanding that such investigative powers are inappropriate in cases of Revenue enquiries in cases of legitimate financial and commercial planning," he said.
The Finance Bill added an aiding and abetting offence to the list of misdemeanours contained in the tax act; this will only apply where an offence is committed after its enactment.
The Revenue would use this measure to hold individuals and companies responsible for encouraging and facilitating tax evasion. Its chairman, Mr Frank Daly, had sought this power as a means to allow it to proceed against major tax-evasion cases. The current measures require what the Revenue has described as an "onerous" level of proof before such a conviction could be secured.
In future, the Revenue could, for example, seek to prosecute someone who knowingly sold a product to a customer that was to be used to evade tax. It could also hold a more senior individual, including managers and company directors, responsible for the actions of their staff either due to their negligence or their "connivance" in such actions.
Commenting on the new measure, the Minister for Finance, Mr Cowen, said he had tried to strike a balance in the Bill between combating tax evasion and avoidance and ensuring that the tax system recognised the needs and concerns of compliant taxpayers. "I have also sought to ensure that the tax system plays a positive role in supporting economic development," he said.
Mr Mark Redmond, chief executive of the Irish Taxation Institute, said it was particularly concerned that the Revenue would be able to initiate prosecutions against individuals without proving that they intended to assist tax evasion. "The proposal to make it easier for Revenue to prosecute those who have aided and abetted tax evasion is very widely drawn and potentially applies to all taxpayers," he said.
The Revenue will also be given powers to obtain information from the State's life assurance companies in relation to single premium life policies used by customers to evade tax.
The Bill contains a number of recommendations made by the Revenue Powers Group, and Mr Cowen said he was continuing to consider others that have not been adopted.
The Bill raises the threshold for the publication of the names of tax defaulters from €12,700 to €30,000. The new threshold will apply to tax evaded after the end of 2004. A number of groups had lobbied to have the threshold raised to €50,000 but the Minister said he believed €30,000 was "reasonable". It will be index-linked in the future.
The Institute of Certified Public Accountants in Ireland welcomed the increase in the threshold and described it as "a sensible move". Its president, Mr Eamonn Siggins, said it would encourage small tax defaulters to regularise their tax affairs without fear of publication in the national press.
The Bill will reduce the interest rate applied on underpaid tax to a daily simple interest rate equivalent to 10 per cent per annum for taxes such as VAT, PAYE and PRSI. This will apply to periods after April 1st, 2005.
The 2 per cent per month interest charge applied by the Revenue in circumstances where tax liabilities were incurred as a result of fraud and neglect is to be abolished but can still be used in historical cases.
The 200 per cent tax-geared penalty for fraud has also been repealed but again can be applied to historical cases.
