THE REVENUE is targeting bars, bouncers and barristers with special investigations and audits because of a high risk of non-compliance in these businesses.
Publishing the agency’s 2008 annual report yesterday, Revenue Commissioners chairwoman Josephine Feehily singled out security, pubs and barristers as warranting special scrutiny.
“They are cash businesses, and there is always a high risk of non-compliance in cash businesses,” Ms Feehily said.
She told a press conference that audits of 23 barristers last year produced a total of €1 million in unpaid taxes, penalties and interest. Ms Feehily pointed out that the unpaid tax would have amounted to less than half the total, as the penalties and interest charged are high.
A new system for licensing the security industry, which provides bouncers for pubs and clubs, and security staff for other businesses, has also flagged up the potential for participants to hide their full liability. According to Ms Feehily, these firms must get tax clearance before they are licensed.
She said that a number of liquidations in the hospitality industry turned up incidences where businesses and individuals were not declaring the full extent of their liabilities.
Ms Feehily emphasised that taxpayers who are having trouble meeting their liabilities as a result of cash-flow problems should talk to the Revenue. “We have no interest in making a difficult situation worse for a viable business,” she said. “I can assure you that you will find us very willing to engage.”
However, she warned that the Revenue will make “inevitable decisions in situations where there is no realistic engagement with us”.
Last year, the courts handed down 20 convictions for serious tax and duty evasion. One person received a three-year jail sentence, which was suspended to six months’ imprisonment. There were 48 prosecutions for failure to submit VAT returns, resulting in fines totalling €374,719. One person was jailed for failing to pay fine. There were over 1,100 convictions for non-filing of income and corporation tax returns, resulting in €2.23 million in fines imposed by the courts.
A new voluntary disclosure scheme for people holding untaxed funds of €100,000 or more in accounts has yielded €73.8 million to date.
The Revenue was challenging 49 avoidance schemes at the end of the year. Ms Feehily said that where tax advisers come up with schemes that the agency believes are “inappropriate or aggressive”, it will challenge them.
She explained that this involved the Revenue telling advisers that it won’t allow the scheme in question, and then engaging with them if they want to argue the case. This process can ultimately lead to appeals and from there to the courts.
Last year, the Revenue introduced a new system under which taxpayers who declare avoidance schemes will not have to pay interest and penalties if the schemes are found to be in breach of tax law.
This resulted in 70 declarations last year compared to eight in 2007. “It means that our prior notification system is working,” Ms Feehily said.
Overall, the Revenue’s net receipts came to €41.1 billion in 2008, €6.43 billion less than in 2007, and €8 billion shy of the budget estimate. It collected over €9.9 billion on behalf of other State agencies.
Ms Feehily blamed the recession for the fall in receipts and said that asset-related taxes were hardest hit. The returns from capital gains tax and stamp duty halved during 2008.
The chairwoman noted that the influence of the economic environment was evident daily to Revenue staff when dealing with taxpayers and advisers.
