The Revenue Commissioners have widened their latest investigation into tax evasion to include new forms of life-assurance products not previously known to be within the scope of the inquiry into single-premium accounts, writes Arthur Beesley, Senior Business Correspondent.
As the Revenue gave evaders a six-week deadline to declare any outstanding liabilities from single-premium accounts opened since 1980, it said the investigation would also cover unit-linked bonds, tracker bonds and guaranteed-growth bonds.
Such accounts are set up initially with a lump sum, which can be topped up later with further lump sums. Revenue officials are examining whether evaders put untaxed or undeclared income into these products and single-premium accounts as a way of hiding the money from the tax authorities.
The investigators believe such a mechanism is likely to have been used by some business people to hide money. They will focus in the initial phase of the investigation on evaders whose aggregate investments were €20,000 or more.
While the names of evaders who make voluntary disclosures before May 23rd will not be published, the Revenue warned yesterday that it was prepared to go to the courts to secure information that would enable it to pursue those who failed to come forward voluntarily.
The Revenue has asked life insurance firms to write to more than 200,000 account-holders to inform them about the investigation.
"We're not looking around in the dark," said Paddy Donnelly, the official in charge of the investigation. "We have clear indications that this is an area that needs to be investigated." The Revenue is not investigating the role of the insurance industry in selling the products but officials named Irish Life, New Ireland, Hibernian, Ark Life, Eagle Star and Canada Life as companies which had sold such products in the period under examination.
The Insurance Industry Federation said it was co-operating with the Revenue but a spokeswoman said insurers had some "issues" with the logistics of the process in relation to its cost and the question of customer confidentiality.
In addition, Pat Costello, the Institute of Chartered Accountants in Ireland's chief executive, said accountants had been given too little time to help members of the public to make declarations.
The inquiry could provide a major boost to the public finances, although Mr Donnelly said only that the process had the potential to bring "hundreds of millions" of euro into the Exchequer.
However, Revenue chairman Frank Daly has already indicated that more than €1 billion could be raised even if "hot money" amounted to only a small percentage of the €33 billion written in single-premium accounts between 1980 and 2001.
It emerged yesterday that the Revenue's interest in this area was initially triggered by evaders who settled their liabilities from bogus non-resident accounts, the Ansbacher scheme and other offshore vehicles.
As the Revenue initiated what will be its third voluntary disclosure process, it revealed that the Exchequer had received €1.66 billion from its ongoing investigations into National Irish Bank's Clerical Medical Insurance products and other vehicles such as Ansbacher.
The disclosure scheme will operate in a similar way to previous investigations. Evaders who make voluntary disclosures will have to pay all tax due with interest by July 22nd. Such people will receive "significantly reduced penalties" and will not be investigated in the context of a criminal prosecution.
Evaders who opened accounts after 1991 will have to pay a standard penalty of 10 per cent on the tax due in addition to annual interest of about 12.5 per cent. Those with accounts opened before 1991 will have to pay a penalty of 100 per cent on the tax due.