Loophole meant beneficiaries of tax amnesties could permanently avoid ever being named as tax dodgers

THE Department of Finance had to make a series of last minute changes in Budget 2017 to ensure tax dodgers could not use a series of loopholes to avoid being named and shamed by Revenue.

The Revenue Commissioners explained in internal emails how several members of the public had prevented publication of their name in the quarterly list of tax defaulters which they publish.

One loophole meant that if people made a voluntary disclosure, some of them could not be listed even if they ended up owing much more tax than they had originally admitted to.

A second loophole meant that people who did not make an agreement with Revenue over how much tax they owed could also avoid publication.

A third suggested that people who availed of tax amnesties in 1988 and 1993 could continue to dodge publication even if they went on to avoid tax again and got caught out.

An email sent to the Department of Finance by Revenue said that people were starting to take advantage of “unintended ambiguities” in the legislation.

In a submission, they said there were four areas of the law that were causing difficulties.

Where people made a disclosure of a small amount of tax, Revenue were then facing major difficulties in publishing details of that person if much larger scale evasion was later discovered.

They said: “We must exercise care in publishing the names of taxpayers if any doubt exists as to whether an exemption to publication does or does not apply.”

They also said people who had actually settled up with Revenue were being unfairly lumped in with people who had never made any payments.

“The effect of this is that the paying and the non-paying defaulter are treated the same, i.e. both are published without distinction,” the submission explained.

“This would appear not to be equitable and it reduces the transparency of the material published as it can make it appear that a case is now up to date with Revenue liabilities when that may not be the situation.”

A third problem also cropped up because of the highly controversial tax amnesties that Ireland offered in both 1988 and 1993.

Incredibly, the legislation appears to have left open the possibility that anybody who benefited from either amnesty could then remain exempt from publication permanently.

The submission said: “It would be clearly contrary to fairness and transparency if, having once made a settlement to which [either amnesty] … applied, the person became a person in whose case future settlements for tax defaults continued to fall within the publication exceptions.

“However, there is a clear danger based on the literal words of the [legislation] … that such a person could successfully challenge the publication of future settlements in their case.”

The final “administrative” issue arose because the Department of Finance had failed to change the threshold at which publication of a defaulter’s name occurs.

The threshold should have risen from €33,000 to €35,000 in 2015 – meaning some unfortunate tax defaulter with a €34,000 settlement could have ended up having their name wrongly published.

In an email response to Revenue, the Department of Finance said the four suggested changes may have come too late and that they would be “unlikely” to get approval ahead of the announcement of Budget 2017.

In response, a senior Revenue official Brian McCabe wrote: “Just to let you know that we are likely to ‘push’ on this. We don’t regard it as lower priority.”

A submission was then prepared for Finance Minister Michael Noonan, who agreed with all four proposals and signed off on them last October.

In a statement, the Revenue Commissioners said: “If there is a serious doubt about whether a taxpayer meets the criteria which obliges Revenue to publish a taxpayer’s details in the List of Defaulters, Revenue, generally, will not publish the taxpayer details.

“Following an enquiry by a taxpayer, Revenue had some concerns about certain unintended ambiguities in the law that could call into question our ability to publish taxpayers in particular circumstances.”

The Department of Finance said they had only become aware of the issues after receiving an email from Revenue last June.

They said: “[Revenue’s] submission was considered by the Department, who agreed that it was desirable to make the changes proposed, and it formed the basis of the Department’s submission to the Minister.

“The publication regime for tax defaulters, along with other sanctions and penalties, is considered by the Department and Revenue to be a very important component of the overall deterrence of tax evasion in a self-assessment based system.”

The FOI documents below

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