Revenue to examine suspected tax scam in insurance

The Revenue Commissioners is to begin investigating a new suspected tax-evasion scam in the New Year, it emerged today.

Details of the investigation emerged after the chairman of the Dáil Public Accounts Committee (PAC) received confidential information on the alleged fraud that may involve up to €1 billion.

Mr Michael Noonan, chairman of the PAC, said he had received confidential information that convinced him "beyond doubt" that a tax scam involving insurance policies had taken place.

The former Fine Gael leader said the Minister for Finance, Mr Cowen, had confirmed that the total amount written by the industry in single premium insurance between 1988 and 2001 was in excess of €33 billion. In the four years leading to 2001, it was €25 billion.

It is suspected that single premium insurance products were used to invest undeclared income for the purposes of evading tax. Single premium products allowed the investment of lump sums, rather than opting for monthly or annual repayments.

Mr Frank Daly, chairman of the Revenue Commissioners, said the issue had been under investigation for some time and that from what he had seen, it would certainly be a significant inquiry.

"We are convinced there is a problem and that the insurance area is a risk area," he said.

Mr Daly told the committee that up to 12 of the 26 insurance companies operating in the State would be examined.

"The probability is that we will model it on the successful approach to the bogus accounts and the very successful approach to the offshore that we will first of all engage with the industry and see what co-operation we can get there," he said.

"We will then probably define the voluntary disclosure period and then we will follow through as we have done with the other investigations. That phase of the investigations . . . I expect to kick off in the new year," he added.

He said the risk period was likely to be prior to January 2001 before the imposition of an exit tax on such insurance policies.

"Our interest in it is solely where people use these products to hide untaxed income and that will be the focus of our investigation," he added.