There were no criminal proceedings initiated by the Revenue Commissioners against individuals who failed to remit VAT or income tax deducted under the PAYE regulations from 1992 to 1996, the Comptroller's report discloses.
The Comptroller points out that a visible policy of prosecuting under criminal law should be an effective deterrent against those who evade tax. Under the 1983 Finance Act, anyone who fails to remit VAT or income tax can be fined up to £10,000 or imprisoned for up to five years.
The Comptroller asked the Revenue Commissioners how many prosecutions had been taken from 1992 to 1996, and was told none had but that there were a number of cases currently being processed.
The Commissioners said they believed the provision in the 1983 Finance Act should be only used against a limited number of taxpayers whose "non-compliant attitude" to the payment of tax was "mirrored by a similar attitude to other requirements of the tax system". They said they intended to pursue an active prosecution policy for cases involving serious tax evasion.
The Commissioners cited their switch to a more active prosecution policy as the reason for the significant fall-off in the number of settlements by its investigation branch. In 1996, the Commissioners completed 90 investigations. Of these, 47 resulted in back-tax settlements amounting to £5.94 million. This compares to 144 cases in 1995, of which 85 yielded £14.4 million.
Early in 1996, the Revenue Commissioners reorganised its investigation branch. It concentrated staff in pursuing a prosecution strategy "in contrast to the previously prevailing policy of accepting monetary settlements in virtually all cases".
The Comptroller found that between 1991 and 1993, the Commissioners obtained 910 judgment mortgages. This is where a judgment which the Commissioners have been granted by the courts can be registered against the taxpayer. It creates what is known as a judgment mortgage against specific land or property owned by the taxpayer.
However, only 96 of these were obtained in the years 1994 to 1996. Furthermore, none had been sought up to June 1997. The Comptroller asked the Commissioners to explain the decrease. He was told the 1993 tax amnesty had caused a slowdown in enforcement activity generally. A reappraisal of their use showed that they may have been overused in the past.
The Comptroller was also told that bankruptcy proceedings had only been instituted in one case between 1992 and 1996. He was told that because of costs and the extent of the formalities involved, this particular tactic would never be likely to be considered in many cases.
The Commissioners can also apply to the High Court to have a company wound up if it is owed more than £1,000. The Comptroller was told that the Commissioners had made 36 petitions to the courts from 1992 to 1996 to have companies wound up.