4 February 2004

Publication of Report of Revenue Powers Group

Mr Charlie McCreevy, T.D., Minister for Finance, announced the publication today, 4 February 2004, of the Report of the Revenue Powers Group. The Group was appointed last March to advise the Minister on the effectiveness of Revenue's powers and any changes needed, taking into account the appropriate balance between the need to secure the revenue of the State and the rights of the taxpayer. The Minister expressed his appreciation for the work of the Group under the chairmanship of Mr Justice Francis Murphy.

“I am publishing the report today to allow a period for public debate and reflection on many of the wide-ranging issues raised by the recommendations. I will consider the various recommendations in the context of next year’s Finance Bill,” he said.

At the time the Group was established, the Minister noted that there is an ongoing need to take regular stock of the remit of Revenue powers in order to assure the Government and the public at large that these are meeting the needs of the system and are being used fully as the Oireachtas intended. He said the opportunity presented itself to perform such a stock-taking exercise to ensure that the balance and strategic direction put in place is right.

The Revenue Powers Group reported to the Minister in early December. The Group’s main recommendations were as follows:

• Some new powers for Revenue:
o Automatic reporting of interest and of income on certain transactions and also payments made by Government Departments.
o Improvements in Revenue’s off-shore information powers.
o Enhanced powers of criminal investigation (access to telephone records, Revenue officials to be permitted to question persons in Garda custody).

• Some reform of the interest and penalties regime to bring the statutory provisions into line with practice (including abolition of the 200% penalty and 24% interest rates) and further amendments to balance the system towards the taxpayer who has made an innocent error/genuine misinterpretation in which case there would be a lower interest rate based on CPI. The Group recommend that the changes proposed in the interest and penalty regime should be ring-fenced from so-called legacy cases.

• Reduction in interest rate from 11.75% to 10% and revision of publication limit for certain tax settlements from €12,700 to €50,000.

• Improving the safeguards and preconditions for the use of certain existing powers, including placing existing authorisations for certain powers onto a statutory footing, introducing High Court supervision to Section 906A and removing the power of search without warrant.

• Confirming in legislation features of the voluntary disclosure regime with some amendments including providing for an appeal mechanism.

• Restricted information disclosure from Revenue to other official agencies particularly in case of a full voluntary disclosure.

• Extended appeal provisions focussed on access to the Appeal Commissioners, including appeal during audit regarding unreasonable length, relevance of documents, disruption caused by the removal of records/equipment; an appeal on penalties categorisation; appeal in regard to voluntary disclosure.

The Group considered the powers of the Irish Revenue Commissioners to be broadly in line with those of other jurisdictions but with some variations between tax administrations in terms of preconditions and safeguards on the more intrusive powers.

The Group considered that powers of access to the financial institutions introduced in Finance Bill 1999 have proved to be effective and to have a deterrent effect overall. They established that these and other powers introduced in 1999 are used sparingly.

The members of the Group were

Mr. Justice Francis Murphy, formerly of the Supreme Court, chaired the Group.

Ms Julie Burke
Practising solicitor specialising exclusively in tax dispute work and tax legislation, Editor of the Irish Tax Review, Revenue Law Lecturer at UCD, co-author of ‘Irish Case Law for the Tax Practitioner’.

Mr James Jennings
Tax Practitioner, Partner in Jennings and Co, Chartered Accountants, Castlebar, Fellow of Institute of Chartered Accountants, Member of Institute of Taxation, Former Chairman of Western Society of Institute of Chartered Accountants.

Ms Suzanne Kelly
Tax Lawyer, Deputy President of Institute of Taxation (President from May 2003), Director of VHI.

Mr Sean Moriarty
Assistant Secretary, Office of the Revenue Commissioners.

Mr Michael Mullins
Tax Partner, HLB Nathans, Chartered Accountants, Cork and Dublin, Former President of Institute of Taxation, Director of the Lough Credit Union Ltd.

Mr Roderick Ryan
Executive Director Glen Dimplex, Former Managing Partner, Arthur Andersen and Head of its Tax Practice, Past Chairman of Foundation for Fiscal Studies, Member of Government - appointed IFSC Committee.

The Terms of Reference for the Group were

1) To enquire into the main statutory powers available to the Revenue Commissioners to establish tax liabilities including investigation with a view to prosecution of Revenue offences.

2) To advise the Minister for Finance as to

- the effectiveness of these powers;

- the appropriate balance between the need to secure the revenue of the State and the rights of the taxpayer;

- whether there is a need for further powers or streamlining of existing powers;

- comparable powers in other jurisdictions and other regulatory agencies in the State;

- the appropriate appeal or review mechanisms that should be applied in the exercise of these powers.

3) To report on the results of their enquiries and considerations and to make such recommendations as they think fit to the Minister of Finance by 31 October 2003.

Click here to go to the report

ENDS