The Revenue Commissioners is investigating further film investments that it suspects have been used in as-yet uncovered abuses of a tax-relief scheme, The Irish Times learned last night.
The Revenue yesterday told an Oireachtas committee that it had increased its estimate of the sum lost to the Exchequer through abuses of the tax relief scheme for film investments from €17 million to €23.3 million. As the scheme allows individuals to claim 33 per cent of the full amount off their tax bills, this means the total investments involved came to around €70 million.
The level of abuse is around 8 per cent of total tax foregone under the relief, which is governed by section 481 of the Taxes Consolidation Act, 1997. Finance Minister, Mr McCreevy, plans to abolish it at the end of next year.
However, the Joint Oireachtas Committee on Finance and the Public Service yesterday unanimously supported a recommendation that that the tax break be extended until December 31st 2007, despite the evidence of abuse being investigated by the Revenue.
A spokesman for the Revenue last night told The Irish Times that it is currently auditing a number of productions that benefited from the relief. He confirmed that the audits were "targeted" and were being carried out because the tax authorities suspect that the schemes involved were used to abuse the incentive. He would not say how many projects were involved.
In a letter to the Joint Oireachtas Committee on Finance and Public Affairs, Revenue Commissioners principal officer, Ms Muriel Hinch, said that along with €17 million lost to abuse, discovered by a series of audits, the commissioners had identified a further €6.3 million "outside of the audit context". She told the committee last week about the €17 million loss, which she said involved 30 projects.
The letter shows that €19.4 million was lost between 1993 and 1997, and €3.9 million between 1997 and 2001. A total of 34 films were involved.
Mr Andrew Lowe, chairman of industry body, Screen Producers Ireland (SPI), argued yesterday that those figures bore out the group's claim that most of the abuses occurred during the mid-1990s. He said the law governing the relief was then tightened up to eliminate the risk of it occurring again.
However, Ms Hinch's letter indicates that the Revenue has yet to establish the levels of compliance and non-compliance during the 1997 to 2001 period. "There is inevitably a long lead-in time to the commencement of audits in film cases," she says.
"Companies have two years in which to spend the section 481 investments and there is a further time lag for the completion of compliance procedures. In the circumstances, it is too early to come to a conclusion about the level of compliance in the years 1997/98 to 2000/01."
