Making peace with the Revenue can take time but is worthwhile, writes Bernard Doherty

Up to 120,000 bank customers have until March 29th to reply to letters about offshore funds. If you think you have a liability this is what you should do.

Contact your adviser

Bring the matter to the attention of your accountant, solicitor or tax adviser as soon as possible. If you do not have a professional adviser, appoint one immediately.

You will need to meet your adviser to carefully go through the information available. All of your circumstances will be relevant in establishing the extent of the liability and it is essential that all relevant information is made available, otherwise your adviser may not be in a position to obtain the most favourable settlement possible.

Gather information

Furnish your adviser with all of the relevant information without delay to enable him to correspond with the Revenue Commissioners on your behalf.

This information should include bank statements, details of source of lodgment, that is declared or undeclared income, gifts, inheritances, proceeds of assets disposed of etcetera, details of the offshore investments and any other information relevant to your financial affairs.

Submit a Notice of Intention

Submit a "Notice of Intention to make a Qualifying Disclosure" to Revenue by March 29th. This will allow the taxpayer to avail of the benefits associated with a qualifying disclosure as above.

Categorise source of funds

Review the source of all funds used to establish the offshore account or product (including all subsequent lodgments) in order to ascertain:

Whether those funds were already taxed;

Whether those funds arose from non-taxable sources - such as gifts or inheritances, which were below the taxable threshold, or, for example, from proceeds from the sale of a private home.

This may require a lot of detailed research but without this information your adviser will not be in a position to correctly assess the extent of your liability. In the absence of records, it may be possible to make assumptions about the nature of funds but these must be reasonable and consistent with your circumstances.

Calculate the liability due

The Revenue has produced comprehensive tax computation worksheets to assist taxpayers and advisers in calculating outstanding liabilities.

There are 16 worksheets available in the Revenue's booklet Making a Qualifying Disclosure of an Offshore Related Tax Default to Revenue, which is available on the Revenue website at www.revenue.ie.

Also available is a PRSI worksheet, which facilitates the computation of PRSI liabilities.

Statutory interest and penalties should be included in the calculation of total liabilities due. However, professional advice should be sought to manage the whole process and to ascertain how to mitigate your liability.

Submit a disclosure

Submit a "Disclosure of Statement of Amounts Due" to the Revenue before May 28th.

In order for it to be a valid disclosure, you should include the following:

a tax computation;

a payment;

a declaration confirming that the disclosure is correct and complete.

If all the information cannot be obtained, you should apply for an extension to the deadline.

If a full payment cannot be made then a payment on account of a substantial portion of the final liability should be made. A payment on account also stops the clock running in respect of interest.

If the Offshore Assets Group regards your reasons for requesting the extension as good and sufficient, and the payment satisfactory, it will agree to your request.

After the submission

Your submission will be referred to your local Revenue office for consideration and examined for accuracy by a Revenue official. Once the Revenue official is satisfied with your submission, an "offer in settlement" will be recommended for approval by senior officials.

Anyone considering their position and whether to make a disclosure should be mindful of Section 84 of the Finance Bill 2004, which introduces a new section into the Taxes Consolidation Act 1997. It gives the Revenue powers to seek information, on foot of a High Court Order, from an Irish financial institution about an "associated institution" outside of Ireland, that is overseas operations of Irish financial institutions.

Revenue is closing in on tax evaders and failure to sort your affairs now could lead to a costly settlement in the future. Early action and co-operation with Revenue is the key to a satisfactory outcome in any investigation.

Bernard Doherty is tax partner with Grant Thornton