Rev Powers PDF

Revenue Powers Group
Report to the Minister for

Finance
November 2003
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Membership
Chairman
Mr Justice Francis Murphy, formerly of the Supreme Court.
Members
Ms Julie Burke, Solicitor specialising exclusively in tax disputes and tax legislation.
Mr James Jennings, Partner in Jennings and Co, Chartered Accountants, Castlebar.
Ms Suzanne Kelly, Barrister at law, President of Institute of Taxation.
Mr Sean Moriarty, Assistant Secretary, Office of the Revenue Commissioners.
Mr Michael Mullins, Partner, HLB Nathans, Chartered Accountants, Cork & Dublin.
Mr Roderick Ryan, Executive Director, Glen Dimplex.
Secretary
Ms Stephanie ODonnell
Secretariat
Mr Eamon Healy
Mr David Owens
Ms Anne Sheridan (to July 2003)
Ms Sighle de Barra (from July 2003)
Ms Sinead OGara
Mr Karl Foster
iii
Table of Contents
Preface: Introduction and Background
xi
1.
Terms of Reference
xi
2.
Revenue Powers
xi
3.
Development of Revenue Powers
xi
4.
Review of Powers
xii
5.
Workings of the Revenue Powers Group
xii
6.
Acknowledgements
xii
Chapter 1: Executive Summary
1.
Main Statutory Powers Reviewed
2.
Overall Conclusions
3.
Recommendations
4.
Effectiveness of Existing Powers (Chapter 2)
5.
The Appropriate Balance of Revenue Powers (Chapter 3)
6.
Streamlining of Existing Powers (Chapter 3)
7.
Need for Further Powers (Chapter 4)
8.
Appropriate Appeal or Review Mechanisms on Powers (Chapter 5)
9.
Comparable Powers in other Jurisdictions and Regulatory Authorities

(Chapter 6)
General Considerations
10.
Table A: Use of Non-Routine Powers
11
Chapter 2: Effectiveness of Revenue Powers
13
1.
Introduction
13
2.
Relevant Factors
13
Changes in Revenue Organisation
14
Restructuring
15
3.
4.
Usage and Effectiveness of Powers mainly used in Audits
16
Breakdown of Audit, Investigation and Prosecution Powers
16
Numbers of Audits Carried Out 1999-2002
17
Number of audits, audit yields and revenue yields 1990-2002
18
Observations
18
Average Yield per Audit
19
Underlying Factors behind Audit Yield Variances
19
Usage and Effectiveness of Powers mainly used in Investigations
21
Use of non-routine powers: 1999-2003 (to date)
22
Special Investigations
24
24
Aggregate of settlements received from special investigations (\m)
25
Usage and effectiveness of powers used in Prosecution
25
25
Results of Prosecution of Income Tax Non-Filers 1997 to 2002
25
Revenues role in investigation with a view to prosecution
26
Prosecution for serious tax evasion
Prosecution for non-filing
6.
DIRT/BNR and Audit Investigations Yields 2000-2003
5.
26
Prosecuted cases of serious tax evasion
27
Civil Penalties and their interaction with Prosecutions
27
Deterrent Value of Prosecution and Civil Penalties
29
The Groups Conclusions regarding the Effectiveness of Revenue Powers
29
Audits and Investigations
30
Prosecutions
30
Chapter 3: Appropriate Balance of Powers Safeguards
31
1.
Authorisations
31
Introduction
31
Restraints on Powers
31
Non-routine powers
32
S900 to S901 Power to call for production of books, information etc. and
Application to the High Court: production of books, information etc.
33
S904A Power of Inspection: returns and collection of appropriate tax
33
S906A Information to be furnished by financial institutions
33
S909 Power to require return of property
35
Other Powers from Chapter 4
36
S906 Authorised officers and Garda Sochana
36
Search and Authorisation
37
vi
2.
3.
Audit, Investigation and Mitigation
40
Introduction
40
Audit Issues
41
Mitigation of penalties and issues concerning interest
41
Comprehensive Audits Interest and Penalties as proportion of tax yield
42
Bogus Non-resident Cases Penalties and Interest
43
Published Cases as percentage of Total Settlements
44
Mitigation of Penalties
45
4.
Recovery of Civil Penalties
45
5.
Interest
47
48
Compromise of Interest Rate

6.
Voluntary Disclosure
50
7.
Prosecution and Voluntary Disclosure
52
8.
Publication of Names and Prosecution of Offenders
53
9.
Disclosure of Information by Revenue to other Official Agencies
53
10.
Power to Remove and Retain Records.
54
11.
Compliance with Orders
55
12.
Streamlining of Existing Powers
56
Selected Revenue Powers
58
Audit Powers
58
Investigation Powers
59
Prosecution Powers
59
Chapter 4: Need for Further Powers
61
1.
Introduction
61
2.
Automatic Reporting of Information by Third Parties
62
3.
Automatic provision of information on interest payments on deposits in financial

institutions and income earned on other financial transactionsreferenced by
PPSN number
63
De Minimis Issue
vii
64
4.
5.
6.
Automatic reporting of Payments made to taxpayers by Government

Departments referenced by PPSN number
64
Offshore Assets: Powers to establish beneficial ownership of offshore assets

over which a resident entity has control
66
Payments for Services Provided from Countries with which Ireland does not
have a Tax Treaty
66
Sone other Issues Considered in this General Context

7.
Additional Prosecution Powers
67
68
68
History and Context of Prosecution Powers
68
Search and Production Powers
70
Power of Arrest
71
Power to Obtain Information under Oath
72
72
Introduction
Access to Telephone Records in a Criminal Investigation

Chapter 5: Appeals and Reviews of Revenue Powers
75
1.
Existing Review and Appeal Mechanisms
75
2.
Other Relevant Examinations
75
3.
International Approach
75
4.
Administrative Review
76
Internal Administrative Reviews
76
External Administrative Reviews
77
Revenue Internal and External Reviews 1999-2002
78
Experience of External Reviewers

5.
6.
78
79
Issues concerning the Appeal Commissioners
80
81
Complaints made to the Ombudsman about Revenue
81
Appeal Commissioners
The Ombudsman
7.
Judicial Review
82
8.
Conclusions and Recommendations
82
Chapter 6: Comparable Powers in Certain Other Jurisdictions and Other Regulatory

Authorities
85
1.
Powers in other Jurisdictions
85
Issues for Comparative Analysis
85
Type of Tax Administration
86
Obligation to File Returns
87
viii
2.
Information Powers
87
87
Time Periods for retention of books and records by the taxpayer
88
Access to Third Party Information
89
Professional Privilege
89
89
89
General preconditions for Entry
90
Requirement for Court Order or Warrant to Search
90
Seizure and retention of books and records
92
Appeals
93
Penalties and Interest: Power to Mitigate or Compromise
93
Access to First Party Information
3.
Audit and Investigation of Tax Liabilities

Power of Entry and Search
4.
95
Prosecution of Tax Offences
96
Other Sanctions
97
Comparable Powers in Regulatory Authorities
98
Regulatory Authorities
98
Issues for analysis
98
99
Power to Require Information from Third Parties
99
Power to Require Production of Records and Information
99
Transition to Investigation
Power to carry out investigations
101
Investigation with a View to Prosecution
101
Mitigation and Penalties
102
Maximum Combined Levels of Fines and Penalties
103
103
Power to Seize Document and Records
105
Appeal Mechanisms
105
Power of Arrest and Detention
106
Power to Summon Witnesses
106
Other Measures
107
109
Chapter 7: Full List of the Groups Recommendations

ix
Appendices
A.
Provisions in European Convention On Human Rights Act 2003
119
B.
Outline of Eskort system
121
C.
Irish Response to the Questionnaire circulated to Other Jurisdictions
123
D.
List of Contributors to Review
133
E.
List of Sections referred to in Submissions
135
F.
Revenues Statutory Powers to establish tax liabilities
139
G.
Extract from OECD report Improving Access to Bank Information for Tax
Purposes 2000: Table 3.1.1
145
Extract from OECD report Taxpayers Rights and Obligations 1990: Control and
Search Powers of Tax Authorities Tables 9A and 9B; Administrative Discretion
of Tax Authorities Table 11.
147
Current Sources of Information to Revenue
155
H.
I.
Preface: Introduction and Background

1. Terms of Reference
1.1. The Revenue Powers Group was established by the Minister for Finance, Mr Charlie
McCreevy, TD in March 2003 with the following terms of reference:
(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.
2. Revenue Powers
2.1. Broadly speaking the statutory powers of the Irish Revenue Commissioners are characteristic
of those of other tax administrations1, i.e. general information powers including the power to
require information from the taxpayer and from third parties, the power to require returns from
the taxpayer and third parties, the power to require production of records, the power of entry,
search and removal of records and the power to mitigate penalties in certain circumstances. As
in other countries, the legislation provides for interest charges and a variety of fines, surcharges
and penalties in the case of late or inaccurate returns to the Revenue Commissioners by the
taxpayer and/or third parties. The legislation also provides for offences and penalties in the case
of certain other acts or omissions.
3. Development of Revenue Powers

3.1. Key developments in revenue powers have occurred in 1976, 1983, 1992 and 1999 with
further strengthening in the period 1999 2003. These developments were driven both by
See Taxpayers Rights and Obligations A Survey of the Legal Situation in OECD countries, OECD 1990. There are variations
between administrations in terms of preconditions and restraints on the powers.
xi
changes in the way Revenue operates and, in 1992 and 1999, by public revelations of systematic
tax evasion. Whereas Value Added Tax a self-assessed tax has been in place since 1972, it
was not until 1988 that the self-assessment approach began to be extended to direct taxes. There
has been a consequent increase in outdoor activity by Revenue Officers,2 initially involving the
inspection of underlying records to verify VAT returns and later extending to on site visits to
inspect, verify or investigate taxpayer returns of direct taxes liability.
3.2. The use of outdoor powers to verify returns, inspect records or investigate selected cases
underpins the self-assessment system. In addition, the selection of returns for verification is
increasingly influenced by technological developments. The use of computerised systems to match
taxpayer information, including information from third party returns, has increased in order to
improve the targeting of non-compliant taxpayers. Many of Revenues current powers address the
requirement to obtain information and the need to verify various returns by having access to the
underlying records.
4. Review of Powers
4.1. The Minister for Finance, Mr Charlie McCreevy, T.D., undertook to keep the operation of
the powers under review when providing for increased powers in the 1999 Finance Act. The
Minister has stated 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.3
4.2. In the context of the establishment of the Revenue Powers Group, the Minister stated:
The additional powers I gave to the Revenue Commissioners since becoming Minister are
very significant. In the last month I set up a Revenue Powers Group to review those powers,
to assess a number of matters, including an evaluation of whether the balance is just right.4
5. Workings of the Revenue Powers Group

5.1. The Group convened in April 2003 and met 14 times between April and November 2003.
These meetings included four day-long sessions, on 26 June, 8 September and 6-7 October, to
concentrate on specific issues. Advertisements inviting submissions to the Group were placed in
the national newspapers on 29 April and 2 May 2003. The Group also wrote to a number of
professional and public bodies. The Group consulted a number of other tax administrations5 and
other regulatory authorities regarding their powers.
6. Acknowledgements
6.1. The Group wishes to thank the members of the public and the professional and public
bodies who made submissions.6 Although a minority of issues raised were outside the terms of
reference, all submissions helped the Group in their enquiry. The Group also wishes to express
The term audit first appears in TCA 1997: S904A

At the annual dinner of the Institute of Taxation on 28 February 2003, the Minister for Finance said: The opportunity presents itself
now to perform such a stock-taking exercise to ensure that the balance and strategic direction we have put in place is right.
4
Reply to Dail question concerning tax inspections: 8 April 2003.
5
UK, New Zealand, Australia, Canada, Sweden, USA and the Netherlands.
6
See acknowledgements at Appendix D.
3
xii
its appreciation to the tax administrations and the Irish regulatory bodies7 who completed
questionnaires and provided follow up material. A number of other persons and public bodies
provided valuable assistance to the Chairman and Secretariat in clarifying certain issues. The
Revenue Commissioners were asked for briefing material on numerous occasions and always
gave their full cooperation even where a request was made at short notice.
6.2. Most of all, the Group as a whole, and the Chairman in particular, wishes to record their
thanks to Ms. Stephanie ODonnell and the other members of the Secretariat who procured,
analysed and presented to the Group the arguments made to, and the information required by,
the Group; and drafted and re-drafted the many papers and proposals required to advance the
work of the Inquiry. The Group is appreciative of the outstanding work which was done by the
Secretariat and the good grace and good humour with which they worked the unsociable hours
which were required to perform their task.
6.3. Finally, the Group found the Consultation Paper issued by the Law Reform Commission in
June 2003 on the case for a Revenue Court and Fiscal Prosecutor to be an invaluable up-to-date
reference source on the development of the Irish Tax System.
6.4. The Group wishes to note that this review does not represent a legal opinion on any of the
powers considered.
Competition Authority, Office of the Director of Corporate Enforcement, IFSRA, the Garda, CAB, Companies Registration Office
and the Department of Social and Family Affairs.
xiii
Members of Revenue Powers Group

Signed:
Mr. Justice Francis Murphy
Formerly of the Supreme Court.
(Chairman)
Ms. Julie Burke
Solicitor, J. M. Burke Solicitors
Mr. James Jennings

Partner, Jennings and Co. Chartered
Accountants.
Ms. Suzanne Kelly

Barrister at Law, President of the Institute of
Taxation
Mr. Sean Moriarty
Assistant Secretary, Office of the Revenue
Commissioners.
Mr. Michael Mullins

Tax Partner, HLB Nathans Chartered
Accountants.
Mr. Roderick Ryan

Executive Director, Glen Dimplex.
xiv
CHAPTER 1
Executive Summary
1.
Main Statutory Powers Reviewed
1.1. The Group identified approximately 120 sections8 containing powers to establish tax
liabilities. The Group concentrated its enquiries and considerations on:
The powers set out in Chapter 4 Part 38 of the Taxes Consolidation Act 1997: Revenue
Powers;
Powers raised in submissions to the Group;9
Issues arising in relation to third party information powers under which information is
disclosed to Revenue through reporting obligations;
Interest and penalties provisions10 because of their role in settlements given
Revenues power to mitigate.
Scope of the Terms of Reference

1.2. The Group considered that collection powers and powers relating to the customs and excise
area were excluded by the terms of reference.
2. Overall Conclusions
2.1. Revenue powers in Ireland are generally in line with international norms. The Group
accepted the need for far-reaching Revenue powers11 provided that adequate safeguards apply
to their use.12 The legislation should carry the key restraints on the use of the powers, while it is
accepted that these may be amplified in codes of practice and operations manuals.13 In this regard
the Group recommends a number of legislative provisions which should enhance the safeguards
for the taxpayer including additional appeal provisions.
2.2. The Group considers that streamlining of the powers legislation is necessary to make clear
the gradations in powers appropriate for use in audit, investigation of tax liabilities and
See Appendix F.
See list of powers mentioned in submissions at Appendix E.
10
Including publication.
11
Submissions to the Group did not seek to remove the powers of access to the financial institutions, introduced in 1999, but
commented instead on the need for safeguards.
12
A small number of cases of inappropriate behaviour in the confrontational use of the powers were reported.
13
There was a general appreciation, endorsed by the Group, of the quality of Revenues endeavour to develop administrative
safeguards in regard to use of the powers.
9
investigation with a view to prosecution and the attendant safeguards, authorisations and appeal
provisions.The Group considers that the existing revenue powers are adequate to allow Revenue
to carry out its task with the exception of a limited number of areas. The Group recommends that
the jurisdiction of the Appeal Commissioners be extended regarding the use of the powers. The
Group also recommends some reform of the interest and penalties regime. Finally, the Group
recommends that the remaining legacy cases, as defined at 5.2.7 below, should be treated in
line with the practice heretofore.
3.
Recommendations
3.1. The Groups recommendations are summarised hereunder using the following headings:
Effectiveness of Existing Powers; Appropriate Balance of Revenue Powers; Streamlining of Existing
Powers; Need for Further Powers, including powers regarding investigation with a view to
prosecution; Appropriate Appeal or Review Mechanisms; and Comparable Powers in other
Jurisdictions and other Regulatory Agencies in the State in line with the terms of reference.
4.
Effectiveness of Existing Powers (Chapter 2)
4.1. Overall the Group considers that Revenue powers are necessary not only to uncover
evasion but also as a deterrent to evasion in the first place. However, it is difficult to assess a
correlation between the existence of a power and its effectiveness on compliance or on the
Exchequers overall yield from taxation. That being said, Revenue would not have been able to
conduct its investigations into evaded DIRT and tax on the underlying deposits without certain
powers introduced in the 1999 Finance Act to access information in financial institutions (see
Chapter 2) investigations which have brought in over \800 million. There is now an
understanding that Revenue can access financial and other records more readily than before and
this has contributed to greater levels of disclosure both prompted and unprompted. The Group
makes some recommendations in regard to the ongoing management and measurement of the
effect of powers.
5.
The Appropriate Balance of Revenue Powers (Chapter 3)
5.1. To balance better the need to secure the revenue of the State with the rights of taxpayers
additional legislative safeguards are proposed in the following areas:
New objective preconditions for the use of some of the more intrusive powers.
New safeguards on certain powers, e.g. search, removal of records.
Legislating for number of areas in which Revenue has a developed system of practice
under the power to mitigate, e.g. penalty regime and voluntary disclosure, with some
amendments to the existing provisions in the 2002 Code of Practice.
Additional appeal to the Appeal Commissioners on areas concerning the exercise of

powers including the interest and penalties area.
Changes in regard to access to third party information.

2
5.2. Specific proposals include:

Search
5.2.2. The removal of the power to search any premises without a warrant.14
5.2.3. A requirement to distinguish in a warrant between a private dwelling and a business
premises15 and between a search in relation to tax liability and search in an investigation
with a view to prosecutions.
5.2.4. More limited criteria for search warrant applications made under current S905(2A).
Removal of Records
5.2.5. Specific statutory limit on the period for which seized records may be retained16 in
a non-prosecution case and prescribed time limit for provision of copies to taxpayer in
prosecution case.
Penalty and Interest Regime
5.2.6. There is a need for a codified structure for interest and penalties to be statutorily
defined. The Group considers that the interest and penalty regime in the legislation should
be brought into line with Revenues 2002 code of practice, with some amendments. This
would involve:
Abolition of 2% per month penalty interest rate and similar tax geared civil
penalty of 200% of tax liability from the legislation.
5.2.7. The existing practice be amended to introduce:
Small reduction in interest rate from 12% to 10% to ensure that the rate
continues to act as a deterrent but is not penal.
New category of innocent error17 linked to track record in past 3 years.
Mitigation of interest to a rate equivalent to the time value of money in defined
circumstances.18
Appeal to Appeal Commissioners on categorisation of penalties19 and on interest
payable in certain defined circumstances.
A limit on the period for which interest will be levied, in line with the approach
followed in BNR cases.20
14
Power of search of business without warrant exists in S903, S904, S905(2)(a)(iv)(B). Arguably, it could be used in a private
residence if domestic workers on PAYE were employed.
15
Power to search premises without a warrant exists in 6 of the 7 jurisdictions studied; conversely, power to search a private
dwelling is subject to warrant in 6 of the 7 jurisdictions. Searches are subject to objective preconditions in a number of
jurisdictions.
16
Statutory time limits on retention of seized records in Sweden, New Zealand, Canada; administrative limit in UK.
17
UK recognises category of innocent error.
18
Time value of money as represented by consumer price index to apply (1) where late payment resulted from innocent error as
defined (2) where a taxpayer made a genuine but mistaken interpretation of a tax provision and a substantial interest charge was
now due as a result of a determination of an appeal.
19
The Group notes the view of the Law Reform Commission that an appeal to the Appeal Commissioner is probably necessary to
ensure conformity with the requirements of the European Convention on Human Rights. The Group proposes a particular formula
where there is no agreement on the penalty category.
20
Par 4.3 of Statement of Practice SP Gen 01/01; this would involve a widening of practice.
Ring fencing from new provisions of cases currently under investigation, i.e.
legacy cases, defined as follows: Clerical Medical International/National Irish
Bank, Ansbacher, BNR and any disclosure arising as a result of a current
investigation by the Revenue Offshore Assets Group in respect of the taxpayer.21
Provision for Revenue to sue for a lesser amount of the penalty.
5.2.8. Existing statutory reference22 should be expanded to include a provision that full
voluntary disclosure should carry safety from prosecution23 for tax offences and provision
for an appeal to the Appeal Commissioners.
5.2.9. There should be no disclosure of information provided in a voluntary disclosure
except as may be required by law.
5.2.10. The legislation should provide for an appeal to the Appeal Commissioners against
any determinations by Revenue in regard to a voluntary disclosure.
5.2.11. A taxpayer who is the subject of an investigation24 should be invited to mandate
information in advance of a request to a financial institution;25 Revenue to make application
to the High Court if mandate not provided.
Unreasonable Requests for Information
5.2.12. There should be an appeal to the Appeal Commissioners to determine disputes
as to the relevance of documents and information sought by authorised officers.26
Length of Audit
5.2.13. To protect against unjustified disruption to taxpayers there should be limits on the
length of audit and an appeal to the Appeal Commissioners against breaches of the limit or
an appeal to stay an audit to ensure that audits do not go on for an unreasonable length
of time.
Publication
5.2.14. The threshold for publication should be increased from \12,70027 to not less than
\50,000 as the current limit, which was set twenty years ago, is considered too low and to
lessen the impact of the penalty in material cases.
21
As regards the interest roll-up, this would apply to investigations underway or announced.
Currently referred to with regard to exemption from publication S1086 TCA 1997.
23
Immunity provided in USA if no fraud money laundering or criminal activity determined; UK if unprompted and Netherlands if full
voluntary disclosure (all provided administratively except Netherlands).
24
Under s906A
25
This practice applies in investigations by the Department of Social and Family Affairs.
26
i.e. beyond the records required in a particular investigation; automatic reporting should also help to reduce demands in this
regard.
27
Comprising tax, interest and penalties.
22
6. Streamlining of Existing Powers (Chapter 3)

6.1. The Group made a distinction between:
the more invasive powers appropriate to investigation and prosecution cases which
impact on a smaller percentage of taxpayers28 and
powers which are regularly employed in a standard audit to establish tax liabilities and
which thus have the potential to impact on a larger group of taxpayers.
6.2. As a result of this distinction the overall approach to streamlining which they recommend
is that:
6.2.2. The gradation of powers from less intrusive to more invasive should be made
transparent in the legislation in line with the transitions from audit to investigation and
investigation with a view to prosecution.
6.2.3. The legislation should specify what third party supervision and internal revenue
authorisation levels29 are required to activate the more intrusive powers.
6.2.4. Existing prosecution powers30 should be separated from the other powers. This will
protect the rights of the taxpayer but should also help with the alignment of procedures to
ensure that evidence collected in a revenue investigation does not become tainted by selfincrimination and therefore inadmissible in a criminal trial. Also there should be an
appropriate power of search under warrant for use in criminal cases.
6.2.5. The appropriate avenue of appeal applying to each of the three categories above
should be clear from the legislation.
7. Need for Further Powers (Chapter 4)

7.1. The Group recommends a number of new provisions as follows:
General Provision
7.1.2. Explicit positive statutory statement of Revenues right to obtain all relevant
document and records31 should be provided.
Third Party Information Powers
7.1.3. The automatic provision of information on (i) interest payments on deposits in
financial institutions32 and income earned on other financial transactions33 and (ii) payments
made to taxpayers by Government Departments,34 referenced by PPSN number, subject to
28
See Table at end of Executive Summary for usage of non-routine powers.

A number of sections already do this e.g. S901, S902A, but other significant powers are subject only to internal instructions for
authorisation in the Revenue Operations Manual e.g. S900, S904A, S905 (apart from S905(2A) and S905(2)(e)).
30
currently S905(2A) and S908A TCA 1997 are used exclusively for prosecution cases.
31
Existing provisions in S899 and S956 require to be underpinned by a general right.
32
Automatic reporting of information on taxpayers sources of income is common in other jurisdictions, see Appendix G for extract
from Improving Access to Bank Information for Tax Purposes 2000, OECD.
33
Capital gains and income arising on the encashment of other financial products. Effectively this is an extension of the intermediary
provisions in the current code.
34
S910 allows Revenue to obtain information from Minister of Government.
29
proper information security safeguards; subject also to Revenue demonstrating a capacity

to make use of such information,35 to the information being made available to the taxpayer
on request and to a review of the provision within five years.36
Offshore Assets and Overseas Payments
7.1.4. New power, subject to High Court supervision, to establish the beneficial ownership
of offshore assets over which a resident entity has control;37
7.1.5. Taxpayers to satisfy Revenue that payments for services provided from countries
with which Ireland does not have a tax treaty are bona fide commercial transactions in
the absence of which tax can be assessed at the income tax standard rate on the payments.38
7.1.6. A power for Revenue to access telephone records in criminal investigations.
7.1.7. Revenue investigators should be permitted to question persons detained in Garda
custody in connection with an arrestable revenue offence.
7.1.8. Further studies required in regard to the appropriateness of granting powers of
search and production of records under recent criminal justice legislation.
8. Appropriate Appeal or Review Mechanisms on Powers (Chapter 5)

8.1. The jurisdiction of the Appeal Commissioners should be extended in the light of the
statutory amendments proposed to allow appeals on the categorisation of penalties, the interest
level in certain defined situations and the facts defining a voluntary disclosure.
8.2. In addition the Appeal Commissioners should be empowered to adjudicate: (1) whether
Revenue have a right in law to seek particular information, (2) breach of proposed statutory time
limits on audit and/or a request to stay an audit (3) unreasonable disruption to business from the
removal of current records and equipment subject to these arrangements being practicable in
terms of resources available to the Appeal Commissioner and subject to the taxpayer being
required in all cases to pay the tax which is not in dispute.39
8.3. The Group envisages the Appeal Commissioners holding regular short hearings based on
oral evidence to decide summarily matters of fact the Monday morning session.
35
To ensure that the compliance cost on third parties of providing such information is proportionate to the benefit; there is some
evidence that much information has been sought from taxpayers which has not been used in the past eg form 46G.
36
If adverse social consequences arise, there could be a threshold figure introduced by Ministerial Order, subject to such
safeguards as might be considered necessary.
37
Statutory definition of control would be required. All jurisdictions consulted had access to records of foreign controlled entities.
38
This would operate like a deemed withholding tax.
39
Currently taxpayers must pay tax in accordance with the information on his/her return.
External Reviewers40
8.4. The Group considers that the External Reviewers should continue in the role which they
currently fulfil as quality assurance on the internal customer service function effectively Revenue
conduct issues but they should have a profile independent of the Revenue Commissioners and
their role should be better publicised.
9. Comparable Powers in other Jurisdictions and Regulatory Authorities

(Chapter 6)
Other Jurisdictions
9.1. The Group surveyed seven other jurisdictions.41 The powers of other jurisdictions consulted
are broadly comparable but there were variations in terms of preconditions and limitations on the
use of the more intrusive powers i.e. powers of entry, production of records, search and removal
of records. To some extent these reflect the different tax administrations and legal traditions. The
other jurisdictions have access to a wider range of taxpayer records in that they have access to
records relating to resident controlled foreign entities. While the safe harbour concept involved
in voluntary disclosure is accepted internationally, there are variations in the legislative and
administrative provisions in regard to voluntary disclosure.42
9.2. The appeal during audit regarding use of powers is generally to a court, except in the UK
where there is an appeal to the Tax Appeal Tribunal to stay an audit which it is claimed has gone
on too long. The Netherlands and the UK C&E were the only tax authorities with the power to
arrest and detain suspected tax offenders for questioning.
Other Regulatory Agencies
9.3. The Group examined comparable powers in other regulatory agencies and enquired into
both the range of powers and any preconditions or restrictions on the use of the powers and
made detailed enquiries into the availability of powers to undertake investigation with a view to
prosecution. The following bodies were consulted: the Competition Authority, Office of the
Director of Corporate Enforcement (ODCE) and the Companies Registration Office,43 IFSRA,
Department of Social and Family Affairs and An Garda Sochana.The summary of the findings is
at Chapter 6. Most of these bodies have access to third party information and have legal provision
for information sharing also. Some of these are cited at Appendix I Current Sources of
Information to Revenue.
9.4. The Department of Social and Family Affairs do not have an express power of entry and do
not have a search power. Of the remaining four bodies, three require a court order/warrant for
entry to a business premises and all required a warrant for entry to a private residence and had
the power to remove records. Few of the bodies had the power to reduce penalties but most had
the power to not impose a sanction or select a case for sanction.44
40
Instituted at the time of the 1999 Finance Act powers; issues regarding the 1999 powers have arisen rarely before them.
In the UK jurisdiction, two tax authorities were surveyed (Inland Revenue and Customs & Excise).
42
No voluntary disclosure in Sweden.
43
These have complementary powers in the Company Law area.
44
IFSRA, Department of Social and Family Affairs, CAB, Competition Authority; power allowing ODCE to accept a penalty in lieu of
prosecution provided under statute but not in force yet.
41
9.5. In regard to powers used in investigation with a view to prosecution, the power of direct
arrest for questioning is available to CAB, Competition Authority and ODCE through members of
An Garda Sochana seconded to the Agency.
9.6. The Group noted that compelled evidence given by anyone under compulsion of law is
not admissible against him/her in a criminal investigation.45
10. General Considerations

10.1. Finally a number of issues arose in the course of the review which the Group considers it
important to note:
Communication
10.2. While these are available on Revenues website, greater publicity for Revenue operations
manuals and codes of practice is required. The Group considers that these publications and the
information which they provide particularly in relation to appellate procedures would be of
assistance in dealing with situations of conflict or confrontation between taxpayer and Revenue
officials.
Third Party Information
10.3. The fact that third party disclosure mechanisms are improving Revenues information base
should help reduce the need for Revenue to intrude on compliant taxpayers and on third parties
in individual cases. Significant changes in the regulatory environment have the potential to
increase the flow of information to Revenue from third parties both within Ireland46 and
internationally.47 These developments will have an impact on compliance levels. Revenue intends
to have a new integrated information management system48 in place by 2004.
Information Disclosure
10.4. In view of the traditional presumption of confidentiality in taxpayer dealings with Revenue,
the circumstances in which Revenue must disclose to other foreign and domestic authorities
should be made clear to taxpayers. This observation is made in the light of new legislative
obligations on Revenue to disclose information to other regulatory authorities where there is
suspicion of an offence outside the revenue area. There is a need to ensure that uncertainty in
this regard does not undermine voluntary disclosure.
Interdependence of Powers
10.5. There are implications for revenue powers arising from the pooling of powers between
regulatory authorities in models such as the Criminal Assets Bureau and these need to be
addressed by the appropriate authorities in situations where the powers are being altered,
45
Judgement of Mr Justice Barrington in the matter of National Irish Bank Ltd (Under Investigation) and in the matter of the
Companies Act 1990, delivered 21st January 1999.
46
Empowering of other new regulatory agencies such as IFSRA, ODCE, Competition Authority, strengthening of reporting by
external auditors to regulatory authorities (e.g. auditors must report to ODCE if company has committed an indictable offence),
clarification of directors responsibilities in regard to compliance with statutory requirements, new information flows between
regulatory agencies.
47
EU Savings Directive, Tax Information Exchange Agreements, Money Laundering Regulations.
48
Eskort system.
particularly where specific powers are relied on by the other agencies in their current form. In the
current review the Group did not consider it within its competence to address any implications
for other agencies of proposed new safeguards on existing powers.
Investigation with a View to Prosecution 49
10.6. The Group considers that the clarification set out below should be taken into account by
policy makers and commentators on the outcome of prosecution cases. It requires significant
resources for Revenue to mount a successful prosecution case. In recent years there has been an
extension of statutory provisions for tax geared penalties. In certain cases there are both civil
penalties and criminal sanctions for the same default. In examining the effectiveness of prosecution
powers, the Group considered recent cases where the amount paid by way of interest and
penalties was taken into account by the trial judge in imposing a fine under S1078 of TCA 1997
and the fine imposed was at the lower end of the range.
10.7. The judgement of the Court of Criminal Appeal in The People (Director of Public
Prosecutions) v Redmond explained that:
It is plainly not possible for a sentencing court in a case such as this to ignore the fact that
other penalties, which may be much greater in amount than the cumulative sum of the
maximum fines for these charges have already been paid.50
10.8. The judgement also cited Professor Thomas OMalley in his book Sentencing Law and
Practice who pointed to the growth of multiple responses to crime as opposed to the presumption
of a sole official response to an offence. Professor OMalley stated that the existence of such
measures, which are set to become more prevalent, together with the growth of civil penalties
poses a problem for any sentencing system claiming to be guided by proportionality standards.
These issues are considered at greater length in chapter 2. The Group notes that the recovery of
civil penalties and interest is in itself a very significant sanction and deterrent and this is also
discussed in chapter 2.
Incorporation of European Convention on Human Rights into Irish Law 51
10.9. The Groups recommendations in regard to an appeal on penalties would be consistent
with the view expressed by the Law Reform Commission in regard to the likely need for procedural
protections in regard to civil penalties. The European Convention on Human Rights Act 2003
transposing Irelands obligations under the Convention into domestic law was enacted in June
2003, subject to a commencement order.52 The European Court Of Human Rights has
distinguished between private and public law for purposes of bringing rights from private law
within the scope of the civil rights and obligations under Article 6 (1). It has determined that
tax matters are part of public law and therefore do not involve a determination of a taxpayers
civil rights and obligations under Article 6 (1). On the other hand if civil penalties were considered
to amount to a criminal charge53 for purposes of the Convention, the standard of criminal
49
The Group have recommended that information voluntarily disclosed in a voluntary disclosure should not be used in a criminal
prosecution.
50
In general penalties would not have been mitigated to any great extent in a criminal case such as this; interest is not mitigated in
any case under current provisions.
51
See Appendix A for details of European Convention on Human Rights Act 2003. For an examination of tax case law under ECHR;
see Law Reform Commissions July 2003 Consultation paper on a Fiscal Prosecutor and a Revenue Court.
52
Due to commence with effect from 31 December 2003.
53
European Court adopts it own autonomous definition irrespective of the domestic classification.
protections specified in Article 6 could be sought in individual cases. The implications for Revenue
law and procedures have been considered by the Law Reform Commission. Their current view is
that the European Convention probably requires that there be an appeal from Revenue to an
independent and impartial tribunal, such as the Appeal Commissioners, in respect of penalties.
Scheme of Administrative Redress for Taxpayers
10.10. The Group notes that Revenue proposes to apply the civil service administrative scheme54
of redress to taxpayers when it is agreed. The Charter of Rights promises taxpayers that
compliance costs will be kept to a minimum. Voluntary compliance will be encouraged if
taxpayers consider that they are fairly treated, the system is balanced in their favour to the greatest
extent possible consistent with securing the revenue of the State and that administrative remedies
are available in material cases of unjustifiable loss or disruption. The Group believes that there is
an onus on Revenue to seek to ensure that compliance costs are kept to a minimum. This onus
applies equally in the context of existing powers and of new powers which are sought.
54
Currently under examination by Secretary General Working Group.
10
Table A: Use of Non-Routine Powers

Year
1999
2000
2001
2002
2003
to date
Power
900 Production of books etc. by taxpayer
4755
901 Application to High Court for production of books

etc. by taxpayer
902 Information from Third Party
902A Application to High Court for Information from

Third Party
1 pending
904A Power of inspection: DIRT
17
20
41
19
905(2A) Search Warrant*
4356
906A Information from financial institutions
10
907 Appeal Commissioner: Information from financial

institutions
908 High Court: Information from financial institutions
1757
1908A58 District Court: Revenue Offence Information

from financial institutions*
2 [10]
14 [29]
4 [6]
909 Statements of Affairs
17
41
56
25
* Used only in prosecution cases
55
Section 900 used mostly in relation to Ansbacher inquiries.

Warrants issued for 43 premises in respect of 9 investigations.
57
15 of the 17 in respect of identifying bogus non-resident account holders.
58
Figure in brackets is the number of financial institutions concerned.
56
11
CHAPTER 2
Effectiveness of Revenue Powers
1. Introduction
1.1. The Terms of Reference asked the Group to advise the Minister on the effectiveness of the
main statutory powers available to the Revenue Commissioners to establish tax liabilities including
investigation with a view to prosecution of Revenue offences.
1.2. There are difficulties inherent in any attempt to measure the non-compliant or the black
economy, a measurement which is particularly important in terms of the effectiveness of revenue
powers which aim to keep as many taxpayers as possible within the tax system. Such studies as
have been done indicate that Ireland is not out of line with other European and OECD
economies.59
2. Relevant Factors
2.1. The Group considers that the effectiveness of the statutory powers is influenced by
numerous factors including, but not necessarily limited to, the following:
Developments in Revenues organisation.
Improvements in the level of tax compliance.
Developments in the economic, political and social environment within which

Revenue operate the powers.
Extent of usage of the powers.
Nature and reach of the powers available.
The yields resulting from audits and investigations carried out using the powers.
The criminal convictions obtained using prosecution powers.
2.2. The Group considered these factors and whilst they do not include commentary on each
of these the Group believes that all relevant aspects have been explored, discussed and reflected
in its recommendations.
59
Size and Measurement of the Informal Economy in 110 countries; Friedrich Schneider; Paper presented at Australian National
Tax Centre, Canberra, July 2002.
13
Changes in Revenue Organisation

2.3. Recent changes in the structure of the Office of the Revenue Commissioners are relevant
considerations in analysing the effectiveness of Revenue Powers in the past and gauging how
effective they may be into the future.
2.4. The Revenue Commissioners have eight stated key objectives in their current Statement of
Strategy, three of which read as follows:
Deter and detect tax evasion and the illegal importation of goods and illicit drugs.
Maximise compliance with all aspects of tax and customs law; and
Measure and evaluate performance.60
2.5. The Minister for Finance has stated in the Dail that the Commissioners consider that
ongoing implementation of the efforts and initiatives which they are putting in place should result,
over time, in a significant improvement in compliance.61 The improvement in compliance
spoken of is a clear recognition that Revenue are themselves seeking to better utilize their finite
resources.
2.6. The Minister for Finance stated that the Revenue Commissioners Statement of Strategy 200305, published on 3 March last, contains a very strong emphasis on maximising compliance with tax
and customs legislation and outlines a number of related key objectives and supporting strategies,
including:
An investigations and prosecutions division62 to deal with prosecution of persons

involved in serious tax evasion.
A large cases division with a specific focus on large companies and wealthy
individuals.63
A computerised risk based selection system, Eskort which is under development

and will be brought into operation in some form this year. When fully operational, this
system will allow for the screening of all tax returns against sectoral and business
profiles and will provide a sophisticated selection basis for cases for audit.
A code of practice for Revenue audits that outlines clearly the consequences of noncompliance and the penalty provisions which apply in such cases.
Increased resources have been applied to audit programmes and ongoing training
programmes are in place to ensure that all Revenue auditors have the necessary
knowledge and skills to audit effectively and efficiently; and
A comprehensive strategy to improve tax returns compliance.
60
Annual Report of the Revenue Commissioners.

Dail Eireann 8 April 2003.
62
Additional staff has been allocated to give this the extra capacity it needs and to ensure that a reasonable number of serious
evasion cases are investigated each year with a view to prosecution.
63
This division is preparing a comprehensive analysis of the issues relating to large companies and wealthy individuals, in particular
those which pose a risk to tax revenues across all the taxes and duties payable to the Exchequer.
61
14
Restructuring
2.7. In addition, Revenue is undergoing a fundamental restructuring in order to increase
efficiencies in managing the tax system. The Minister for Finance has given approval to the
Revenue Commissioners to proceed with substantive integration of the taxes departmental and
the general services grades in Revenue. These developments provide a backdrop to any analysis
of the effectiveness of Revenue Powers.
2.8. Effectiveness means producing the desired result. The desired result in terms of the existence
of Revenue Powers is tax compliance. This has been stated on many occasions by the Revenue
Commissioners and Ministers for Finance.
2.9. Revenue Powers may serve to produce this desired tax compliance in a number of ways,
in that they may act:
As a deterrent to potential evaders because of their use in detecting and penalising

those who do not disclose their true income.
As an encouragement to comply by enabling defaulting taxpayers to come forward

and rectify an incorrect return; or
As an enforcement to comply by allowing Revenue to gather evidence and prosecute

criminal tax evaders.
2.10. The Group looked at certain important investigation and prosecution powers, together
with a sample of the less intrusive powers that are used in standard audits.64 The Group considered
these may be divided into three categories as is shown in the Table below (the numbers refer to
the sections of the Taxes Consolidation Act 1997).
64
There have been over 68,000 standard audits since 1999, including VAT audits which are undertaken using S18 of the VAT
Act 1976.
15
Breakdown of Audit, Investigation and Prosecution Powers

Less Intrusive Powers mainly used in
audits
More Intrusive Powers mainly used

in investigations, including special
investigations65
Powers used in cases selected for

prosecution
899 Inspectors right to make

enquiries
900 Production of books etc. by

taxpayer
903 Power of inspection: PAYE
901 Application to High Court for 908A District Court: Revenue

production of books etc. by taxpayer Offence Information from
financial institutions
905(2A) Search Warrant
904 Power of inspection: tax

deduction from certain sub-contractors
904C- 904J: Power of inspection:
assurance companies
investment undertakings
claims by authorised insurers
claims by qualifying lenders
claims by qualifying insurers
qualifying savings managers
dividend withholding tax
professional services
902A Application to High Court

for Information from Third Party
90566 Inspection of documents and

records
904A Power of Inspection: DIRT

enquiries and amend assessments
906A Information from financial

institutions
907 Appeal Commissioner:
Information from financial institutions
908 High Court: Information from
3. Usage and Effectiveness of Powers mainly used in Audits

3.1. The Group examined the evidence from the yields from the use of powers in audit cases
since 1990. Unless otherwise indicated, all the figures quoted, are extracted from the Revenue
Annual Reports from 1988 to 2002. The Group attempted to draw some tentative conclusions
about the effectiveness of the main tranches of powers granted to Revenue by the Oireachtas in
the period especially in the 1992 and 1999 Finance Acts. The table below illustrates the
breakdown of Revenues audit activity by tax-head since 1999.
65
66
Such as Ansbacher and other off-shore entities, DIRT audits, Bogus Non-Resident Investigations.
Subsections such as 905(2)(a)(iv)(B) and 905(2)(e) are, however, potentially intrusive.
16
Numbers of Audits Carried Out 1999-2002

Audit Type
Audits
Completed
2002
Audits
Completed
2001
Audits
Completed
2000
Audits
Completed
1999
Comprehensive (All taxhead)
2,424
2,200
2,270
2,512
VAT
4,300
4,223
4,409
5,101
Employers PAYE/ PRSI
862
1,443
2,104
2,768
Relevant Contracts Tax (RCT)
169
383
352
384
Combined VAT, RCT & PAYE/ PRSI
582
626
670
892
Verification Audits67
Desk Audits
7,594
7,107
1,733
4,393
1,848
3,400
Investigation Branch
30
25
12
10
26
225
334
388
490
Anti-Avoidance
Capital Acquisition Tax
Residential Property Tax
Total number of audits
Yield (m)68
N/A
N/A
1,321
1,096
16,176
16,356
17,672
18,524
\269
\208
\141
\142
Source: Revenue Commissioners
3.2. The graph below seeks to cast some light on the audit yield performance since 1990
(chosen as a benchmark (=100) because it was the first year for which a full self-assessment audit
yield was produced). It shows the trends since then for four indicators:
the total number of audits (until 1998 this was for audits active during the year but
then became completed audits);
the overall audit yield;
the yield per audit, and
the overall Revenue yield (net of repayments).
67
Verification audits include some field audits carried out at a taxpayers place of business and desk verification audits where the
audit is carried out in the office. In 1999 and 2000 separate statistics were kept for desk verification audits. In 2001 and 2002
a guarded estimate is that 30% of verification audits would have involved an examination of records at a taxpayers place of
business.
68
Excludes yield from DIRT look back audits, bogus non-resident accounts, Ansbacher and NIB cases.
17
Number of audits, audit yields and revenue yields 1990-2002
600
Total number of audits
500
Audit Yield
Yield/audi
Overall Revenue Yield
400
300
200
100
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
(Base Year 1990=100)
Observations
3.3. The total number of audits carried out each year has been steadily diminishing since 1994
and presently stands at some 16,000 per year, down from a peak in 1994 of almost 29,000.69
This drop in the number of audits is notable as it is occurring as the average yield per audit
increases, indicating improved targeting amongst other factors such as general economic
buoyancy leading to greater tax liabilities.
69
70
The audit yield dipped in 1993 and again in 1999-2000.70 It is important to note that
the audit yield figures in the table and graph above exclude the yield from the special
investigations and the tax amnesty.
The overall yield from audits remained at the same level from 1994 until 1998, despite
the reduction in the number of audits carried out.
The yield per audit figure roughly mirrored the overall audit yield figure until 20012002.
The overall yield per audit figure has almost doubled since 1999.
This arises from the diversion of resources, as well as a focus on larger cases and improved targeting.
These dips are explained in the Annual Reports as being due to the diversion of experienced audit staff to special projects
(respectively the 1993 Amnesty and the DIRT, NIB, Ansbacher and BNR investigations from 1999 onwards).
18
Average Yield per Audit
45,000
40,000
Comprehensive (All taxhead)
35,000
VAT
Employer's PAYE/PRSI
30,000
Verification Audits
25,000
20,000
15,000
10,000
5,000
0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
3.4. The graph above shows the average audit yield for certain tax head audits. It does not show
the investigation branch and anti-avoidance figures which may arise from investigations and act
to distort the overall picture since they have a very high average yield per audit. It is clear that
the comprehensive audits and the verification audits (and we do not have any pre-1999 statistics
for the latter) have been strong contributors to the recent increase in the audit yield and the yield
per audit. The improved yield from verification audits in the last year or two is largely due to the
success of a particular programme targeting taxpayers who exercised share options, the value of
which are clearly a function of the relative buoyancy of the equity markets. The relative fall-off in
the yield per audit under other tax heads would underscore this point.
Underlying Factors behind Audit Yield Variances

3.5. One could speculate as to the underlying factors behind this recent improved audit
performance the availability of experienced staff, increased resources and consequently
improved research and targeting together with, perhaps, closer performance management all
appear to have contributed. In addition, the non-mitigation of interest since 1998 (see interest
discussion) may have had an influence on the yield figures as may a more rigorous imposition of
penalties. On the other hand, it is also true that tax rates have reduced over the period in question,
which, as a factor, would tend to lessen the average yield.
19
3.6. The Group looked in more detail at Comprehensive Audits, which are important indicators
of the success of the targeted audit programme, as they cover a number of tax-heads and are
more likely to uncover significant defaults than single issue or verification audits.
Year
Number of Comprehensive
Settlements
Nil Settlements included
Nil Settlements as percentage of

Comprehensive Audit Settlements
1990
770
76
%
10
1991
1,496
495
33
1992
2,482
1,024
41
1993
2,537
975
38
1994
3,838
1,124
29
1995
4,058
1,088
27
1996
3,969
981
25
1997
3,635
808
22
1998
3,283
824
25
1999
2,512
823
33
2000
2,270
769
34
2001
2,200
813
37
2002
2,424
938
39
Source: The Revenue Commissioners
3.7. The table above shows that a sizeable proportion of comprehensive audits result in a nil
yield: between 1999 and 2002, the average was 36%; in 2002 this proportion was 39%. In the
period 1994-1998 the proportion averaged 26% and never exceeded 29%. The increase in nil
audits, especially more recently, could also be as a result of various factors such as increased tax
compliance arising, perhaps, from more effective use of the powers or, conversely, from less
measured selection of audit cases. This high level of nil audits indicates the need for better
targeting of revenue powers. In this context, the Group noted that Revenue are introducing a risk
based assessment system to assist in this.
3.8. With regard to overall tax compliance measurement, the Group briefly considered the 2002
annual report of the Comptroller and Auditor General and in particular the examination of the
random audit programme. The Group agrees that random audit results could not be safely
extrapolated to give a universal compliance figure but also believes that a solid statistical trend
could be established based on a regularised random audit programme. The Group also noted the
Comptroller and Auditor Generals concerns about the level of recidivism amongst tax defaulters
and considers Revenue should put in place a standardised procedure to measure this trend.
3.9. The less intrusive powers are regularly used by Revenue but, in overall terms, the data
available does not allow for clear findings concerning the effectiveness of powers. On the one
20
hand the increase in yield might point to more effective use of these powers by Revenue. On the
other hand the increased yield has undoubtedly been influenced by certain special factors such
as the targeting of share options, but, on the other hand, it may well be the case that a similar
yield may have been achieved in any case. Furthermore, the recent dramatic economic growth
resulting in a substantial increase in the overall tax yield for these years would also give rise to
additional yield in targeted cases.
4. Usage and Effectiveness of Powers mainly used in Investigations

4.1. Revenue supplied the Group with information concerning the use of non-routine powers
used mainly in investigations and in investigations with a view to prosecution. In essence these
powers relate to Revenues ability to lawfully require certain information from:
the taxpayer (or first party);
financial institutions about the taxpayer, and
other third parties about the taxpayer
4.2. The Table below details of these non-routine powers together with a brief description of
them and the number of times each has been used since 1999.
4.3. The table below shows that these powers are, by and large, infrequently used. Applications
to the High Court for first or third party information (other than from a financial institution) have
occurred only six times between 1999 and 2003; the formal use of section 902 has only happened
15 times in the same period. However, although section 908 has only been used 27 times, its use
has led to the investigation of 76,000 bogus non-resident accounts involving 149,000 taxpayers.
21
Use of Non-routine Powers

1999
2000
2001
2002
2003
to date
Section and Power

900 Production of books etc. by taxpayer
4771
901 Application to High Court for production of books

etc. by taxpayer

Third Party
1 pending
904A Power of inspection: DIRT
17
20
41
19
905(2A) Search Warrant*
4372
906A Information from financial institutions
10
907 Appeal Commissioner: Information from financial

institutions
908 High Court: Information from financial institutions
1773
908A74 District Court: Revenue Offence Information

2
[10]
14
[29]
4
[6]
17
41
56
25
* Used only in prosecution cases
4.4. Despite the infrequent use of the powers to access financial information, the Group
considers these powers to have an important deterrent effect, in that taxpayers and their advisors
are aware of Revenues ability to require this information should the taxpayer envisage not cooperating with a Revenue request. This may suggest that Revenue do not often need to rely on a
formal activation of the power as, in the normal run of events, neither Revenue nor the taxpayer
is particularly anxious to be placed in a position where they have to go to the High Court.
4.5. Section 909 is the power to require a Statement of Affairs and is more often used than
those mentioned above it has been formally used 147 times since 1999. The Group believes
that Revenue does need this power; the regularity of its usage underlines its value to Revenue.
The Group had some concerns that the Statement of Affairs power might be resorted to if a
Revenue auditor was unprepared to examine a taxpayers existing documentation in that s/he
could simply issue a demand for a return of a statement of affairs. This could put the taxpayer to
some considerable cost in circumstances which may not merit such expense and attention. The
Group therefore suggest the existing authorisation procedure at Principal Officer level be given
legislative standing.
71

Warrants issued for 43 premises in respect of 9 investigations.
73
15 of the 17 in respect of identifying bogus non-resident account holders.
74
72
22
Investigations
300
250
Number Yielding
Number Nil
Investigations
200
150
100
50
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Average Yield (, 000)

700
600
500
400
300
200
100
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
4.6. The trend between 1990 and 2002 in the number of investigations carried out and the
average yield from these, as shown in the tables above, shows a gradual reduction in the average
yield. The finite resources available to Revenue can be advanced as a reason for variations in
yields over the period.
23
4.7. In the course of the 1990s, the numbers of investigations fell with many cases being dealt
with as audits. From 1996 on, Investigation Branch staff were transferred to prosecutions work
and very few new cases were initiated as existing investigations were settled. It is clear that the
numbers of investigations carried out dropped sharply over the decade and also that the
effectiveness of these investigations, measured purely in terms of the financial yields, declined
apart from 2002. The yield in this year reflects the settlements from certain special investigation
cases arising from Ansbacher and the Tribunals.
Special Investigations
4.8. Certain recently introduced Revenue Powers have clearly been used to considerable effect.
Revenue figures show a clear linkage between the powers to access information from financial
institutions in relation to DIRT and the substantial yields from settlements of cases arising from
the usage of these powers.
4.9. The chart below illustrates the clear impact of a number of the specific powers introduced
in the 1999 Finance Act. The yields from the DIRT and BNR cases currently approach \700 million
whilst in the same period standard audit activity has brought in a similar sum. These powers have
been cited by Revenue as being essential to their success in the DIRT look back audits, the follow
up projects in relation to the underlying depositors and the inquiries in relation to Ansbacher
and other off-shore entities.
DIRT/BNR and Audit Investigations Yields 2000-2003
DIRT/BNR and Audit Investigation Yields (m)
300
269
250
DIRT & BNR

Cases
227
220
208
200
200
150
140
135
100
55
50
0
2000
2001
2002
75
24
Jan-Jun 2003
Audit Yields
4.10. In relation to financial institutions Finance Act 1999 introduced several entirely new sections
to the Taxes Consolidation Act 1997: 904A, 906A and 908A and amended or substituted other
sections: 905, 907 and 908. The 2000 figure of \220 million is the aggregate of the Financial
Institutions DIRT related settlements, whilst the 2001 figure of \227 is the quantum of the DIRT
and BNR settlements made under the Incentive offered in that year. The remaining figures in the
chart (2002 and 2003 to date) represent the settlements of BNR account holders who did not
choose to avail of the incentive.
Aggregate of settlements received from special investigations (\m)76
NIB/CMI
\
47
Ansbacher
26
68477
DIRT and Bogus non- resident accounts

Tribunals
24
Offshore Assets Group
111
Total
892
4.11. The Group considers that, in the cases where the powers have been used, their use has
had a positive effect on the collection of additional unpaid tax. Also the existence of the powers
and their exercise may lead to increased compliance in other cases where they are not used
although it is not possible to adduce empirical evidence to support this view. In particular, it is
not possible to define a firm causal relationship between the usage of powers and the effectiveness
of powers with the substantial exception of the DIRT/BNR yields.
5. Usage and effectiveness of powers used in Prosecution

Prosecution for non-filing
5.1. It is Revenue policy to bring criminal prosecutions under Section 1078 of the Taxes
Consolidation Act 1997 against those who ignore their filing responsibilities. Non-filer prosecutions
are taken by way of summary proceedings in the name of the Director of Public Prosecutions in
the District Courts. Prosecutions in Dublin are taken by the Revenue Solicitor, while outside
Dublin the State Solicitors perform this work.
Results of Prosecution of Income Tax Non-Filers 1997 to 2002
1997
1998
1999
2000
2001
2002
1,917
5,450
5,399
6,457
9,818
9,348
Cases referred for issue of summons
853
1,968
2,369
1,951
2,401
1,839
Number of taxpayers convicted
223
659
1,159
936
1,050
972
\0.2m
\0.9m
\1.5m
\0.9m
\1m
\1m
Warning letters
Total Fines
75
2002 and 2003 estimates are derived from Iris Oifigiuil and Revenue website published figures.
Statement by Chairman of the Revenue Commissioners to PAC, October 2003.
77
\227 (Financial Institutions) + \220 (Incentive settlements) leaves a balance of \237m, but some of these figures should be
treated with caution as they are subject to constant revision as settlements continue; for example the total settlements from the
Offshore Assets Group has recently increased to some \122m.
76
25
5.2. Prosecutions for failure to file tax returns are common78: since 1998, Revenue have obtained
District Court convictions under S1078 of the Taxes Consolidation Act 1997 in 5,270 cases of
non-filing and court fines amounting to \6.2 million.
Revenues role in investigation with a view to prosecution
5.3. From a policy point of view there are constraints on Revenue which do not apply to other
agencies undertaking investigation with a view to prosecution:
The major competing objective of pursuing the tax liabilities to a financial settlement.
Revenue investigators do not have Garda powers such as the power of arrest and
detention.
Weighing the heavy resource implications of preparing cases for criminal trial against
the need for resources to establish and collect of tax liabilities.
The existence of civil penalties for the same default as a prosecutable offence.
5.4. Revenue identified two particular sections that are used for prosecution cases: namely
sections 905(2A) and 908A, the usage of which is set out in Table A.79 Audit districts are required
to forward cases to Investigation and Prosecutions Division for investigation with a view to criminal
prosecution where there is prima facie evidence of serious revenue offences having been
committed. These cases are further evaluated within the Division before commencement of the
very resource intensive criminal investigation work which can take several years before reaching
the Courts.
5.5. Convictions were obtained in the three cases decided in Court in 2002. In addition, there
have been five further convictions in 2003 to date. Revenue have stated that there are currently
35 cases under active investigation for prosecution. In the UK, by comparison, there were 18380
convictions for serious tax fraud between 1998 and 2002. So, on average, there were some 45
successful prosecutions a year in the UK which has a population some fifteen times larger than
Ireland which is pro rata at least a similar prosecution record to that in Ireland.
Prosecution for serious tax evasion
5.6. Revenue also investigates cases of serious tax evasion which they believe should be
investigated with a view to prosecution if they involve one or more of the following:
Use of forged or falsified documents;
Systematic scheme to evade tax;
False claims for repayment;
Failure (as distinct from minor delays) in remitting fiduciary taxes;
Deliberate and serious omissions from tax returns;
78
While many of these convictions are successful, they are not without their own operational enforcement difficulties which have
been outlined by the Comptroller and Auditor General in his recent report. See 2002 Report of the C&AG (Chapter 2; section
2.8).
79
At the end of the Executive Summary.
80
245 defendants were brought to court and 183 were convicted, 24 were acquitted, 13 defendants offered no evidence (because
the case was dropped, the defendant was in ill health or the evidence was inadmissible) and 25 cases were stayed for technical
reasons.
26
Use of off-shore bank accounts to evade tax;
Insidious schemes of tax evasion;
Aiding and abetting the commission of a tax offence; and
Offences under the Waiver of Certain Tax, Interest and Penalties Act 1993.81
Prosecuted cases of serious tax evasion

Year
1997
1998
1999
2000
2001
2002
2003
Cases under Investigation at Year

End
18
24
33
31
31
Convictions
42,854
19,046
952
6,666
5,540
16,865
Fines Collected (\)
635
Custodial Sentence (Suspended)
2(2)
2(1)
4(2)
(1)
Acquittal
5.7. According to the 2002 Code of Practice for Revenue Auditors, the following considerations
will influence the decision to investigate with a view to prosecution (as opposed to investigation
with a view to financial settlement):
Whether sufficient evidence is or will be available to prove that the accused committed
the alleged offence beyond reasonable doubt;
The length of time since discovery of the alleged offence and any damage consequent
on a delay in initiating proceedings;
The assessment of the cost of prosecution;
The culpability, responsibility and experience of the accused;
The deterrent effect of prosecution for the particular offence; and
Whether full disclosure has been made, whether co-operation has been given and
whether the tax, interest and penalties due have been paid.
Civil Penalties and their interaction with Prosecutions

2.8. A standard prosecution scenario currently is that Revenue will prosecute for an offence
under section 1078 of the Taxes Consolidation Act 1997,82 typically the offence of filing a false
tax return. There are also civil penalties for this default.83 The overall case will frequently involve
a number of years. The prosecution is taken in respect of the return for a single year but the
81
2002 Code of Practice for Revenue Auditors Appendix 1.

Note that the maximum fine a court may impose under s.1078 of the TCA is \126,970.
83
Under s.1053 TCA 1997 any person who delivers an incorrect return of income is liable civilly to a fixed penalty of \125 and
a tax geared penalty which consists of a sum equal to the amount of tax underpaid where the error was made negligently
and twice that amount where the underpayment was due to fraud).
82
27
interest and penalties84 will arise in respect of all years. The tax geared penalty at the full statutory
rate of 100% of the unpaid tax can constitute a very substantial sum.
5.9. The existence of the right to mitigate civil penalties creates both legal and practical
difficulties as there is an inherent conflict between the exercise of the power to collect tax and
civil penalties on the one hand and the prosecution of offenders on the other. For example, if a
taxpayer were to admit a wrongdoing to a Revenue official with a view to taking advantage of
the promise of mitigation under voluntary disclosure it is unlikely that the admission could be
used in evidence against him in subsequent criminal proceedings. Whether information gleaned
by Revenue as a result of such an admission would itself be admissible in evidence has not yet
been fully explored in this jurisdiction. Also any mitigation prior to the court hearing could
undermine Revenues position.
2.10. In examining the effectiveness of prosecution powers, the Group considered recent cases85
where the amount paid by way of interest and penalties was taken into account by the trial judge
in imposing a fine under section 1078 of TCA 1997 and the fine imposed was at the lower end
of the range.86 The judgement of the Court of Criminal Appeal in The People (Director of Public
Prosecutions) v Redmond explained that:
It is plainly not possible for a sentencing court in a case such as this to ignore the fact that
other penalties, which may be much greater in amount than the cumulative sum of the
maximum fines for these charges have already been paid
5.11. The judgement also cited Professor Thomas OMalley in his book Sentencing Law and
Practice who pointed to the growth of multiple responses to crime as opposed to the presumption
of a sole official response to an offence. Professor OMalley stated that the existence of such
measures, which are set to become more prevalent, together with the growth of civil penalties
poses a problem for any sentencing system claiming to be guided by proportionality standards.
5.12. This would suggest that where a taxpayer has paid very substantial civil penalties the
prospect of securing any significant penalty from the court is remote.
5.13. Possible approaches were considered by the Group as follows but no conclusion was
reached:
That Revenue postpones agreement on civil penalties until the criminal case had been
determined
5.13.1. It is almost certain that this would not solve the problem. The trial judge would
require some undertaking from Revenue as to the course being adopted in relation to civil
penalties or adjourn the imposition of his/her sentence until the civil penalties had been
disposed of.
84
The Revenue Commissioners have a statutory power to mitigate civil penalties (see s.1065 of the 1997 Act), except for years
prior to the 1993 Amnesty where mitigation is statutorily prohibited.
85
Although it should be said cases involving pre 1993 default present an exceptionally penal profile due to strictures in regard to
non mitigation of penalties where there was a failure to avail of amnesty.
86
The maximum fine payable on conviction on indictment is \126,970, which could be added to or replaced by up to five years
in prison.
28
To permit the judge in the criminal proceedings to determine the civil penalties
5.13.2. To vest in the judge in the criminal proceedings the power to impose or order
payment of civil penalties could challenge the distinction between civil and criminal
penalties.
To select for prosecution cases where the civil penalties would be modest
5.13.3. This might result in less serious offenders being convicted and the more serious
offenders escaping prosecution through settlement.
To forego civil penalties altogether in civil cases in respect of which prosecutions are instituted
5.13.4. This solution does overcome many of the legal problems. However, Revenue
might have to waive the right to collect substantial civil penalties in favour of proceedings
in which they would be required to prove their case beyond reasonable doubt and where
the fine imposed might only represent a fraction of the civil penalty foregone.
Deterrent Value of Prosecution and Civil Penalties
5.14. Conviction for a criminal offence carries with it a stigma and opprobrium which is entirely
distinguishable from any possible outcome of civil proceedings. The imposition of a substantial
fine may be an appropriate sanction in some cases but the imposition of a custodial sentence
particularly for white collar crime is generally seen as the most effective deterrent to crimes of
that nature. Accordingly, it is entirely appropriate that Revenue should pursue through the criminal
process serious offences in respect of which adequate evidence is available.
5.15. On the other hand, the Group believes that the attention of taxpayers and the public
generally should be drawn to the penalties which have been imposed by the Oireachtas and can
be recovered by Revenue through the Courts. Such penalties are exigible on the balance of
probabilities whereas criminal conviction requires proof beyond reasonable doubt. Proof
beyond reasonable doubt can be difficult to obtain and frequently can be obtained only by a
disclosure from the taxpayer himself. (A taxpayer is under no obligation to incriminate himself and
consequently, where there is any risk of criminal prosecution taxpayers may not make a voluntary
disclosure.) Consequently civil proceedings may be preferred to a criminal prosecution.
5.16. The provisions requiring publication of the penalties and interest in cases other than those
expressly excepted by the legislation ensures that even civil procedures carry with them a
significant degree of opprobrium.
6. The Groups Conclusions regarding the Effectiveness of Revenue

Powers
6.1. Revenue powers are considered by the Group to be effective as a deterrent and to serve
broadly to reinforce compliance culture. There is a clear perception and understanding abroad
that Revenue can access financial and other records more readily now than heretofore and this
is believed to lead to greater levels of disclosure both prompted and unprompted. It is
noteworthy that Revenues use of powers has given rise to a low level of complaints by way of
submissions.
29
Audits and Investigations

6.2. All audits need powers and clearly they have an effect in that there is a yield from these
audits. The Group was reluctant to draw any other strong conclusions about effectiveness from
audit yields in general, mainly because of the inherent pitfalls in making assumptions about microorganisational effectiveness based on aggregate statistics, in isolation from other factors.
6.3. Having said that, there is a clear and direct relationship between certain powers used in
recent special investigations such as accessing financial institutions to obtain information about
Bogus Non-Resident account holders and the yield from the settlements of the resultant cases.
Prosecutions
2.4. As many of the defendants to date were being prosecuted for first offences, the Courts may
prove to be less lenient should they re-offend. This factor may be worth considering in selecting
future cases. Also future cases may not involve the same history of default. Pro-rata Irelands
prosecution record would appear to be no less than the prosecution record in the UK.
The Groups Recommendations

(1) In view of the Groups difficulties in establishing linkages between the usage of powers
and desired outcomes, the Revenue Commissioners should put in place a systematic
approach to assess the effectiveness of Revenue Powers; the approach could be based
on internationally recognised criteria of tax administration performance measurement,
which might include the trend over time of the cost to the taxpayer of complying with the
use of powers.
(2) Revenue, in line with their re-organisation and restructuring, should establish Regional
Powers Officers in each of the five regions. This officer (at least at Principal Officer grade)
would be accountable for the coordination of the operation of powers in line with
Revenue guidelines. All requests to use more intrusive powers would be routed through
their office therefore ensuring consistent treatment throughout each region. This should
enable better co-ordination and management information and monitoring of the powers.
It may also facilitate the identification of linkages between their actual use (indeed the
request or intention to use could be recorded) and measurable outcomes in terms of
improved compliance.
(3) A better targeting of the powers should be possible in order to improve the cost/yield
ratio given that the rates of nil targeted audits have increased in recent years and are
running close to 40%.
(4) Compliance costs resulting from the use of powers ought to be reduced where possible.
The compliance cost burden on taxpayers should always be actively considered by
policymakers as an issue in relation to the effectiveness of powers and by Revenue in
relation to the usage of powers.
(5) The Revenue Commissioners should periodically, say every three years, include a section
on the effectiveness or otherwise of their powers in their annual report to the Minister for
Finance.
30
CHAPTER 3
Appropriate Balance of Powers Safeguards
1. Authorisations
Introduction
1.1. Comparison with other jurisdictions87 shows that the powers of the Irish Revenue are
characteristic of those of other tax administrations: i.e. first and third party information powers,
the power to require production of records, powers of entry, inspection, search and removal of
records and the power to mitigate penalties in certain circumstances. There are variations between
jurisdictions in terms of the restraints on the use of the more intrusive powers, to some extent
these represent different legal traditions and different administrative practices.
Restraints on Powers
1.2. All of the powers conferred by law on the Revenue Commissioners are subject to certain
restrictions in their use. These restraints are imposed for the protection of the taxpayer and to
ensure that intrusive powers are not exercised indiscriminately, unreasonably or in a manner
which is disproportionate to the objective intended by the Oireachtas. The legislative restraints
upon the Revenue officials exercising the powers under the tax legislation represent legally
enforceable safeguards for the taxpayer. In addition to the specific provisions in the Taxes Acts,
the taxpayer also has his/her general legal rights.
1.3. The administrative means to control the use of the powers include authorisations to use the
powers either specific to each use or on a general enabling basis and instructions in operations
manuals developed by Revenue.88 Revenue has a published Charter of Taxpayers Rights although
it not clear whether these rights are legally enforceable.89 The Ombudsman expects Revenue
powers to be exercised in accordance with the principles outlined in the Ombudsmans Guide to
Best Practice for Public Servants.
1.4. In general, legislative restraints take the following forms:
requiring a formal authorisation either internal or external to the Revenue

Commissioners to invoke particular powers;
87
See Taxpayer Rights and Obligations a survey of the Legal situation in OECD countries, 1990; Control and Search Powers
of Tax Authorities: Tables 9A and 9B. Administrative Discretion of Tax Authorities: Table 11 in Appendix H.
88
There are also Statements of Practice, Guidance Notes and Codes of Practice.
89
In the case McKechnie J in Keogh v the Criminal Assets Bureau and Others (High Court, Unreported, 20/12/02) the judgement
noted that If the process was based on administrative practice or even on a basis truly responsive to the exercise of a
discretionary power, I would think that an argument could be advanced that it is very much incumbent on an inspector who is
exercising a Revenue function to do whatever the relevant part of the Charter says ... but added that these remarks are general
in nature and are not to be taken as expressing a concluded opinion on the nature or scope of enforceable rights (if any) under
the Charter ... in particular I express no view on what legal consequences in other areas any breach thereof might give rise.
31
statutory preconditions on the use of some powers, and
appellate procedures to correct the alleged abuse of powers.
1.5. These legislative restraints should be graded in proportion to the extent to which the
exercise of particular powers intrudes on the constitutional, civil or other rights of the taxpayer.90
1.6. The table below shows the formal authorisations required under Revenues Operations
Manual on Outdoor Powers for the use of certain far-reaching powers. Not all of these
authorisation requirements are specified in the legislation.
Non-routine powers 91
Section and Power
Authorisation
1999-2003
to date
900 Notice by authorised officer requiring production

of books etc. by taxpayer.
Senior Inspector
5992
901 Application to High Court for production of

books etc. by taxpayer
Assistant Secretary
902 Notice from authorised officer for information

from Third Party
Regional Director
15

Third Party
Revenue Commissioner
904A DIRT audit power
Regional Director
97
905(2A) Search Warrant* from District Court
Assistant Secretary
4493
906A Notice from authorised officer for information

from financial institutions in relation to a taxpayer
liability
20
907 Notice from authorised officer for information

from financial institutions regarding taxpayer, including
those of unknown identity and including taxpayers in
respect of whom a DIRT declaration was made
Revenue Commissioner consent for

authorised officer to apply to Appeal
Commissioner for consent to issue
4
(1 pending)
908 application to High Court for information from

financial institutions, including those of unknown identity
and including taxpayers in respect of whom a DIRT
declaration was made
27
908A94 District Court: Revenue Offence Information Revenue Commissioner

20
[45]
909 Statements of Affairs on notice from inspector of

taxes
147
District Inspector
*Used only in prosecution cases
90
The constitutional and human rights considered to be germane to the issue of appropriate restraints on powers included rights
to fair procedure, privacy/confidentiality of documents, inviolability of the dwelling, respect for privacy and family life, right to
silence and to privilege against self-incrimination.
91
These require internal specific authorisation for each use. The use of non routine powers is subject to individual authorisation;
routine powers have a standing authorisation, i.e. do not require specific approval to activate in a particular instance.
92
93
Warrants for 43 premises in respect of 9 investigations.
94
32
1.7. The Groups consideration of these is set out hereunder.

S900 to S901 Power to call for production of books, information etc. and Application to
the High Court: production of books, information etc.
1.8. Submissions to the Group sought the application of objective preconditions to these
powers. The Group agrees with the need for objective preconditions but also recognises the
complexity of crafting these so that they do not unduly fetter proper use of the powers. The
Group has sought to meet this standard in its recommendations.
1.9. No change in authorisation is recommended but the internal authorisation level, which is
specific to each use of the powers, should be specified in the legislation. The fact that these
powers may be used by the Criminal Assets Bureau also means it may give rise to the need in
the legislation to either exclude or provide for equivalent authorisation by other agencies which
access revenue powers through the secondment of revenue officers.
S904A Power of Inspection: returns and collection of appropriate tax
1.10. The revelations regarding the prevalence of bogus non-resident deposit accounts
resulted in Revenue being given, in Finance Act 1999, the power to audit DIRT returns at the
premises of the institutions concerned. While this power was to enable Revenue to uncover the
extent of DIRT evasion in the past, it also permitted the ongoing audit of such returns. In the course
of the audit the authorised officer may examine the procedures in place to ensure compliance with
the DIRT legislation and may check a sample of accounts. Subsequent Finance Acts gave Revenue
the powers to audit systems of other persons who were required to comply with similar obligations
as deposit takers.95 The DIRT audit power has no third party supervision. The Group considers that
the authorisation level of Regional Director/Assistant Secretary should be set out in the legislation.
S906A Information to be furnished by financial institutions
1.11. This section provides for the issue of a notice to a financial institution for information
concerning a taxpayer. Whilst privilege does not attach to communications between a banker
and his/her customer the relationship does confer a high degree of confidentiality which should
be protected. On the other hand, it is clear that there are many cases in which the Revenue
Commissioners would be frustrated in the performance of their statutory duties if they were
denied access to records maintained by financial institutions.
1.12. The nature of this problem and the manner in which it might be resolved was the subject
matter of observations by Chief Justice Keane in Liston .v. G OC 1 IR 501 [1996]. What the Chief
Justice said in dealing with that issue under section 18 of the Finance Act 198396 was as
follows:
The clear object of the provision is, however, to enable the Revenue Commissioners to
obtain information of this nature in order to ensure that all taxpayers pay the tax which by
law they are required to pay. That object would be seriously frustrated if an onus was
imposed on the applicant to satisfy the court that the information sought would in fact
disclose that false returns had been made. However, an order made under this section
seriously abridges the right of confidentiality which every person dealing with the bank
enjoys and it is for that reason that the Oireachtas not merely stipulated that the inspector
95
96
Sections 904C to 904J.

Previous enactment to current S908.
33
must have reasonable grounds for the belief provided the additional and valuable safeguard
that a High Court judge must be satisfied that such reasonable grounds exist before the
institution concerned can be required to furnish the information sought.
1.13. Significant changes were made to powers enabling Revenue to access information held
by financial institutions in 1999. Prior to Finance Act 1999 Revenue could not conduct an audit
of a financial institutions tax return at the premises of the institution as section 905 did not apply
to financial institutions. In addition the powers available to Revenue to access information held in
a financial institution were limited: Revenue could require a named financial institution to furnish
particulars of all accounts maintained by a named person over a 10 year period and to furnish
information relating to the persons financial transactions.
1.14. The current powers in relation to financial institutions97 allow Revenue:
to conduct an audit on the institutions premises under section 905;
by the issue of a notice to a financial institution, to seek information from the institution
regarding the accounts of a named taxpayer under section 906A;
to apply to the Appeal Commissioners under section 90798 or the High Court under
section 908, in order to obtain information from a financial institution regarding a
taxpayer99, where taxpayer includes a person or a group or class of persons whose
identity or in the case of a group or class of persons, the individual identities, are not
known to Revenue and
Section 908A gives power to an authorised officer to apply to a judge of the Circuit
Court or of the District Court for an order authorising the officer to inspect and take
copies of bank records for the purpose of investigation a Revenue Offence.
1.15. Unlike other sections regarding access to information in financial institutions S906A does
not involve third party authorisation. Prior to 1999 all access to financial information involved
application to a third party.100 The third party provision in regard to these powers typically involves
either application to the Appeal Commissioners for consent to issue a notice or application to the
High Court for the information sought from the financial institution.
1.16. The legislation currently provides that the taxpayer should be given a copy of the notice
issued to the financial institution under section 906A. The section 906A power could be
characterised as an investigation power (as opposed to a standard audit power). It has been used
only 10 times since it was enacted. If the legislation provided that the taxpayer should be invited
to mandate101 the bank concerned to provide the relevant information in the absence of which
an application would be made to the High Court it may be anticipated that such consent would
97
The Group recommends in Chapter 4 the automatic transmission by financial institutions to the Revenue Commissioners of all
amounts paid by way of interest by banks to their customers. If that recommendation is accepted the need of the Revenue
Commissioners for full access to the records maintained by banks should be greatly reduced.
98
Section 907 TCA substituted by Section 207 (h) Finance Act 1999.
99
A taxpayer for the purposes of section 907 and 908 includes a company which has been dissolved and an individual who has
died.
100
In the case of section 907, Revenue was required to obtain the determination of the Appeal Commissioners before issuing a
notice seeking the required information. In the case of section 908, an application had to be made to the High Court for an
order requiring the financial institution to furnish the information specified therein former enactment S18 of Finance Act
1983.
101
A mandate procedure is used by the Department of Social Community and Family Affairs.
34
be forthcoming. If not, it would be an appropriate factor for the Court to take into consideration
in determining by whom the costs of the application should be met.
1.17. Based on usage to date it is not anticipated that it would be necessary to make frequent
applications for the authorisation of the High Court to inspect banking records under this section
so amended. The Group also noted that the procedure prescribed by the Rules of the Superior
Courts for making Revenue applications of this nature was by way of motion and not by way of
summons. This procedure would be more expeditious and less expensive than the institution of
substantive proceedings.102
S909 Power to require return of property
1.18. This power is used to ask the taxpayer to provide a Statement of Affairs essentially a
statement of all assets, including non financial assets, and all liabilities. It is used with greater
frequency than the others and involves cost to the taxpayer. The Group had some concerns that
the Statement of Affairs power might be resorted to if a Revenue auditor was unprepared to
examine a taxpayers existing documentation in that s/he could simply issue a demand for a return
of a Statement of Affairs. This could put the taxpayer to some considerable cost in circumstances
which may not merit such expense and attention. The Group therefore suggests the existing
authorisation procedure, at Principal Officer level, be given legislative standing. In consideration
of the fact that this power may be used by the Criminal Assets Bureau also it may be necessary
in the legislation to either exclude or provide for equivalent authorisation on its use by other
agencies which access Revenue powers through the secondment of Revenue officers.
1.19. The table hereafter and ensuing comments set out the Groups considerations of other
powers from Chapter 4.
102
The Senior Registrar of the High Court indicated that an application in accordance with this procedure would usually be heard
within two weeks from the commencement of the proceedings.
35
Other Powers from Chapter 4

Section and Power
Nature of power
899 Inspectors right to make enquiries Audit of third party

return.
Consent required to
use
Regional Director
Officer to be
authorised
Inspector Senior
Inspector

deduction from payments to certain
subcontractors
Entry to business
premises.
904C Power of Inspection (returns and Inspection of records.

collection of appropriate tax): assurance
companies
904D Power of inspection (returns and
collection of appropriate tax): investment Removal and/or
retention of records.
undertakings
904E Power of inspection: claims by
authorised insurers
904F Power of inspection: claims by
qualifying lenders
904G Power of inspection: claims by
qualifying insurers
904H Power of inspection: qualifying
savings manager
904I Power of inspection: returns and
collections of dividends withholding tax
No specific approval
needed once officer is
authorised to use the
section.
Inspection of property.
If taxpayer refuses
consent, approval of
Search of premises for Regional Director will
records (903, 904, 905 be required.103
(2)(a) (iv) (B) only)
Higher Tax Officer

Senior Inspector
Requiring assistance
from third party.
904J Power of inspection: tax deductions

from payments in respect of professional
services by certain persons
905 Inspection of documents and
records
906 Authorised Officers and Garda
Sochana
To be accompanied by
a Garda when
exercising powers
under s.903, 904 or
Assistant Secretary
905 to protect against
obstruction.
Higher Tax Officer

Senior Inspector104
S906 Authorised officers and Garda Socha

na
1.20. This section provides for the involvement of An Garda Sochana in the exercise of Revenue
Powers under sections 903, 904 and 905. In the event that a person obstructs or interferes with
an authorised officer in the exercise of his/her powers the member or members of An Garda
Sochana may arrest that person. Of its nature an investigation has the potential for creating a
confrontation. The possibility that such a confrontation would escalate into a more serious incident
can necessitate the involvement of An Garda Siochana under S906.
103
Where a request to search is refused by the taxpayer, Revenues Operations Manual indicates that a search warrant is always
sought.
104
This is specifically authorised: Revenues Operations Manual states that HTOs should always be accompanied by a more senior
officer when exercising powers for which prior approval is required.
36
1.21. Revenue officers, as ordinary citizens, are entitled in situations of danger to call upon the
Garda for assistance. Some other regulatory bodies (ODCE, CAB and the Competition Authority)
can rely on the involvement of the Garda Siochana who are seconded to them. No doubt, proper
training of Revenue officials does much to reduce the likelihood of such events. However, in a
small number of incidences it may be appropriate to have a member of An Garda Sochana
present to ensure the safety of the officers involved in the investigation. Revenue authorisation at
Assistant Secretary level is required to avail of S906 in each case but this is not provided for in the
legislation. In addition, current Revenue instructions state that where powers subject to specific
authorisation are used, a Higher Tax Officer must always be accompanied by a more senior
officer.

Authorisations
(6) The powers legislation should specify in all cases the levels of third party and Revenue
authorisations required to activate any of the above powers from Chapter 4.
(7) Regarding S900 and S901 one or more of the following should exist for the activation of
these information powers: a failure on the part of the taxpayer or notice is given of audit
or investigation.
(8) S906A should provide that the authorised officer should first request the information from
the taxpayer; that the taxpayer be given an opportunity to authorise or mandate the
information sought (unless this would prejudice a prosecution); and if the taxpayer fails to
so authorise, then the Revenue officer should apply to the High Court for approval to
direct this information be given.105
(9) The full authorisation requirements in regard to the use of S906 should be made legislative.
Search and Authorisation

1.22. The powers of search contained in the existing legislation are necessarily complex. First, a
distinction must be drawn between business premises and domestic accommodation.106 Particular
care is required in regard to a private dwelling where part is used as a business premises. Secondly,
it is necessary to recognise the different considerations which arise when a search is authorised
to procure evidence in support of criminal proceedings in contrast to cases (civil cases) where
the Revenue Commissioners are seeking evidence to establish a tax liability. There are then special
considerations to be taken into account when the premises in question are occupied by a solicitor,
accountant, doctor or other professional person who may be in possession of documents to which
either privilege or a special degree of confidentiality may attach. These considerations are most
clearly evident in the overall construction of Section 905.107
105
Basis of application would be as in S907 and S908 i.e. that Revenue have reasonable grounds for suspecting that the taxpayer
may have failed or may fail to comply with any tax provision and that that would result in significant tax liabilities not being
discharged.
106
A warrant is required to search a private dwelling in six of the seven jurisdictions consulted.
107
Although due to its piecemeal development this section lacks cohesion.
37
1.23. Under existing legislation, there are some circumstances in which a search can be
conducted on behalf of the Revenue Commissioners without any judicial intervention. Sections
903 (PAYE Inspection), 904 (Relevant Contracts Tax Inspection) and 905(2)(a)(iv)B contain a
power to search premises without a warrant. Internal instructions prescribe that if consent for the
search is not forthcoming, the outcome would be that a search warrant should be sought. These
are not powers to search premises as such they provide for the search for particular records
which the authorised officer has reason to believe were not produced on his/her request.
1.24. These powers of search without warrant were introduced in 1992 to address concerns
regarding the suppression of records at business premises. Revenue informed the Group that the
Relevant Contracts Tax is particularly susceptible to abuse which takes the form of forged or
fraudulent documents with potentially very large amounts of tax at stake.
1.25. Revenues powers of search without warrant have been used in very limited circumstances
in recent years. As currently drafted the power of search without warrant in section 903 could
possibly be construed as allowing a search of a private residence where domestic workers on
PAYE were employed.
1.26. The power to search premises without a warrant exists in most of the seven jurisdictions
studied. Ireland is not unique in this respect. There is provision for the use of a search without
warrant by other agencies, e.g. the Health and Safety Authority108 but the situations are not
considered strictly comparable.
1.27. Revenue have said that the search under warrant power in S905(2A) is used only in
prosecution cases, although this is not made clear in the legislation. The main ground on which
Revenue will go to the Court for such an order is to secure evidence of a serious breach of the
tax code. The District Court procedure does not permit or afford the person whose premises are
to be searched being heard in opposition to the application but several judicial decisions have
emphasised the need for the applicant to provide sufficient evidence to the judge of the District
Court to enable the judge to determine if a search is needed.109
1.28. At Common Law authorisation to enter the dwelling or other premises of a citizen for the
purpose of searching or taking documents therefrom was obtained from the District Court or a
court of equivalent jurisdiction. The power to search for stolen goods in accordance with that
procedure has been long established and was subsequently given legislative effect under the
Larceny Act and other legislative provisions. Other legislation such as the Offences Against the
State Act 1939, the Drugs Trafficking Act 1996 and the Criminal Assets Bureau Act 1996 permit
searches to be made with the authority of senior officials of the relevant agency. Such legislation
can be seen as emergency legislation or legislation to deal with very special situations.
1.29. A District Court warrant to conduct a search of premises for evidence in support of
criminal proceedings is self-policing to the extent that if Revenue, the Garda or other parties
concerned exceed their jurisdiction in applying for the warrant or in conducting the search the
evidence obtained might not be admissible in the subsequent criminal proceedings. There is no
comparable protection where the warrant is obtained and the search is conducted to establish a
civil liability.
108
109
Section 50 of the Food Safety Authority Act 1998.

The Group have been afforded the opportunity of inspecting the information and other documents submitted to the District
Court in a variety of cases for the purposes of obtaining a search warrant. It would seem clear that in the cases examined by
or on behalf of the Group that the Revenue Solicitor and the Revenue Officers involved are obliged to apply in full with the
strictures laid down by the Supreme Court when searching a premises or a dwelling.
38
1.30. The main purpose of the power of search without warrant appears to be its deterrent
effect which the Group considers would not be eroded by a requirement to obtain the authority
of the District Court. A private residence which is the place of employment of domestic staff
should not be allowed to be searched without warrant under S903 and a search of any premises
should not be permitted save in accordance with an order or warrant of the District Court. The
Group considers it desirable to make legislative provision to ensure that all searches are conducted
properly whether in connection with a civil or a criminal investigation and that the number
of documents or computer equipment seized is strictly limited. The special distinctions which are
recognised in S905 as necessary to protect the interest of clients of professional persons, whose
premises are the subject matter of a duly authorised search, should be applied to all search powers
as appropriate.

Search in Regard to Establishment of Tax Liabilities
(10) The power to search without warrant in S903, S904 and S905(2)(a)(iv)B should be made
subject to a warrant from the District Court.
(11) A search warrant of the premises of a professional,110 where the professional is a third
party, should specifically restrict the search to files of a particular client or class of clients.
(12) A legislative precondition should be stated that the search should be limited to the
records relevant to the determination of a tax liability of a particular taxpayer or taxpayers
or class of taxpayers.
(13) In investigations into additional tax liability, the present statutory professional privilege
under section 905(2)(c) should apply.
(14) Where an ex parte warrant is sought to establish a tax liability, the warrant of the District
Court should provide that in the event of a dispute about the relevance of any documents
or records obtained as a result of the search, they should be retained by the Revenue
solicitor for five days in his/her capacity as an officer of the court to permit the taxpayer
the opportunity to appeal to the Appeal Commissioners to determine any allegation as
to the relevance of the records so removed to any tax liability.
Criminal Investigation with a View to Prosecution 111
(15) There should be a stand alone power of criminal search.
(16) A search warrant issued in respect of the premises of a professional where the
professional is a third party, should specifically identify the client or clients whose
documents Revenue are entitled to obtain.
(17) The current provisions of S905(2A) should stand in this context except for the condition
regarding an anticipated beach of the tax code i.e. reasonable grounds for suspecting
that a persons may have failed or may fail to comply with any provision of the Acts from
which the element of futurity should be deleted.
110
111
See case of Niemietz v Germany [1993] 16 EHRR 1997 for comments regarding lawyer/client confidentiality and searches.
See also Chapter 5 regarding Prosecution Powers and later in this chapter regarding Power to Remove and Retain Documents.
39
2. Audit, Investigation and Mitigation

Introduction
2.1. The introduction of self-assessment in 1988 was, understandably, counter balanced by the
powers conferred upon Revenue to make inquiries of and concerning the taxpayer and to conduct
investigations of one form or another into his/her affairs to determine the correctness or otherwise
of the returns made by him.112 The onus was placed on taxpayers to make proper returns without
a prompt from the tax inspector. Audit practice developed in this period as a mainstream outdoor
activity for Revenue officers. The available statistics show that such investigations, frequently
described as audits, and the voluntary disclosure which may precede or be prompted by such
audits has done much to secure the compliance if belated with the tax code and has yielded
substantial revenue in the form of arrears of tax, interest and civil penalties.
2.2. There are civil penalties and interest charges for late filing. The Group accepts that these
are necessary provisions to maintain the collection of the revenue of the State but has reservations
about the cumulative impact of these in the longer term and in particular in audit and investigation
negotiations.
2.3. An audit may be triggered in circumstances where a taxpayer has failed to make a tax return
or has made an incomplete return. This may arise from third party information reaching Revenue
in regard to possibly undisclosed income of the taxpayer. Even where there is not the intention
to under-declare tax, the taxpayer may find that he/she has inadvertently done so. The taxpayer
may employ an advisor but in the final analysis the under-declaration is the responsibility of the
taxpayer.
2.4. Every audit carried out on the business or domestic premises of the taxpayer is a source of
potential confrontation. It is possible that the taxpayer could see such an audit as a challenge to
his/her integrity. Some taxpayers who have made submissions to the Group felt that the Revenue
officials adopted a domineering attitude in the course of audits.113 Even if that conclusion was
unwarranted it must be accepted that the audit is a point at which all the powers of Revenue,
legislative and administrative, appear to be arrayed against the taxpayer. In those circumstances
any settlement between Revenue and the taxpayer or his/her advisor may not have the
appearance of being negotiated on equal terms.
2.5. The audit carried out on behalf of Revenue may be a relatively simple verification of certain
items of expenditure. On the other hand, Revenue may see fit to conduct an investigation in
depth over a range of taxes in a given year114 or over a period of years. The investigations may
be carried out with a view to establishing an underpayment of tax due to the neglect of the
taxpayer or it may be an investigation leading to a prosecution for a revenue offence. It will not
always be apparent what the ultimate purpose or outcome of the investigation may be.
112
Obligations to make returns rest with the taxpayer; in general the inspector does not have to request that these be made.
But see also the experience of the External Reviewers in Chapter 5.
114
Defined by Revenue as a comprehensive audit.
113
40
Audit Issues
2.6. Where a difference of opinion arises between the authorised officer and the taxpayer or
his/her advisor concerning the entitlement to particular documents or information or indeed to
the duration of the audit itself there is under the law at present no readily accessible means of
resolving that dispute. It would greatly assist if there was access to a low cost appeal mechanism
in this situation in the course of an audit.115
2.7. A number of submissions outlined the distress and disruption caused to a business where
an audit was prolonged beyond a reasonable period. While there may be good reason for the
delay the Group considers that the reasons for a long delay should be reviewable.

(18) To protect against unjustified disruption to taxpayers there should be limits on the length
of audit and an appeal to the Appeal Commissioners against breaches of the limit or an
appeal to stay an audit to ensure that audits do not go on for an unreasonable length of
time.
(19) The Appeal Commissioners should be given jurisdiction, subject to these arrangements
being practicable in terms of resources available to the Appeal Commissioners, to hear
appeals during an audit in regard to:
Revenues right in law to seek particular information;
Breach of proposed statutory limits on audit and/or request to stay an audit; and
Unreasonable disruption to business from the removal of current records and

equipment.
(20) Every such appeal shall be conditional on the taxpayer paying any tax which is not in
dispute.116
3. Mitigation of penalties and issues concerning interest

3.1. The Revenue Commissioners have powers (indeed they could be described as statutory
responsibilities) to charge interest on unpaid taxes and impose penalties on the taxpayers found
to be in default.
115
Most jurisdictions surveyed stated that any appeal during audit would be to a court, except for UK where the taxpayer can
appeal to the Tax Appeal Tribunal to stay an audit.
116
Currently taxpayer must pay tax in accordance with the information on his/her return.
41
Comprehensive Audits Interest and Penalties as proportion of tax yield
Penalties/Interest as Percentage of Comprehensive Audit Yield
100%
90%
80%
Penalties
Interest
70%
60%
50%
40%
25%
30%
20%
17%
21%
14%
25%
19%
14%
14%
10%
8%
15%
11%
10%
15%
5%
0%
1997
1998
1999
2000
2001
2002
3.2. This graph shows, as a percentage of the total tax yield, the average interest and penalties
actually charged and imposed in comprehensive audits between 1997 and 2002. It is evident
that:
the interest is generally approximately twice the value of the penalties;
the change in policy regarding the compromise of interest in 1998 has had an effect,
and
the penalties imposed in these cases are not, on the face of it, excessive.
42
Bogus Non-resident Cases Penalties and Interest
Penalties and Interest as % of Tax Due
300%
250%
200%
150%
100%
50%
0%
Audit
BNR
3.3. The table above is based on a sample of 40 drawn from the published cases in Iris
Oifigiu
il in September 2003. A split between penalties and interest is not possible as the data is
not published. However it clearly shows that the average aggregate penalties and interest figure
for published BNR cases is in excess of 250%, whereas for the standard Revenue audit cases
being published the aggregate is around 60%, which is more comparable to the 2002 figure for
Comprehensive audits above (at slightly more than 50%). The Group, of course, is aware that
the historic nature of the tax evasion involving bogus non-resident account holders and the
failure of those being published to avail of the 2001 incentive to disclose these accounts, inter
alia, results in the very high levels of penalties and interest being imposed. The table below
shows the recent trend in the proportion of total settlements represented by published cases.
43
Published Cases as percentage of Total Settlements
2.0%
1.8%
1.6%
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
3.4. The chart above shows that, since 1990, there has been a gradual increase in the
proportion of total settlements represented by published cases, but the proportion remains small
(at less than 2% of total settlements).
3.5. A major feature of the civil settlement system is that Revenue may mitigate any fine or
penalty. The power to do this is found in section 1065 TCA 1997 which provides that Revenue
may:
Mitigate any fine or penalty, or stay or compound any proceedings for the recovery of
any fine or penalty, and may also, after judgement, further mitigate the fine or penalty,
and may order any person imprisoned for any offence to be discharged before the term
of his or her imprisonment has expired.
3.6. The 2002 Code of Practice for Revenue Audits sets out Revenues mitigation policy, see
table following.
44
Mitigation of Penalties
Category of Tax
Default
Net Tax-geared
Penalty
Net Penalty after mitigation where there is:

Co-operation only
Co-operation including
Prompted Qualifying
Disclosure
Co-operation including
Unprompted Qualifying
Disclosure
Deliberate Default
%
100
%
75
%
50
%
10
Gross Carelessness
40
30
20
Insufficient Care
20
15
10
3.7. In addition, if the aggregate amount of tax in respect of which penalties are computed is
less than \3,000 and the default is exclusively in the Insufficient Care category, a penalty will
not be imposed.
3.8. The Group believes that the Codes approach to penalties should be incorporated as far as
practicable into statute. Mitigation should be by agreement between Revenue and the taxpayer
and that this need for agreement should be clearly understood. Agreement may not be possible
in all cases. Therefore a system should be put in place whereby, in the absence of agreement,
there will be a rebuttable presumption that the additional tax arose from Gross Carelessness. The
presumption may be rebutted on the basis of evidence presented by the taxpayer or Revenue to
the Appeal Commissioners that another category such as Insufficient Care or Innocent Error
should apply.
4. Recovery of Civil Penalties

4.1. The Revenue Commissioners have rarely instituted proceedings to recover civil penalties,
presumably because the amount of the civil penalty has always been agreed and paid by the
taxpayer. What is clear, however, is that if proceedings were to be instituted the appropriate
amount of the claim would be the full penalty and not the sum to which the Revenue
Commissioners believe that it should be mitigated. The Court has no function in mitigating the
penalty. The result is that in the absence of agreement between the Revenue Commissioners and
the defaulting taxpayer as to the appropriate level of mitigation the Revenue Commissioners
would recover judgment for a larger sum than they regarded as appropriate. This must constitute
an injustice.
4.2. The Group considers that the prospect of Revenue suing for the full penalty overshadows
negotiations with taxpayers. The Group considers that the penalties regime, in operation for
certain specific categories of tax defaulters, should remain in place for all legacy cases (i.e.
specified investigation cases which are currently being followed up by Revenue)117. This would
ring-fence current defaulters and ensure that cases currently under investigation would not stall
settlement in the hope of being able to avail of a more beneficial regime.
117
Legacy cases are defined in the Executive Summary under Penalty and Interest regime.
45
4.3. The Revenue Commissioners have made it clear to the Group that they have rarely sought
to recover a civil penalty on the grounds of fraud. Moreover, they have very clearly recognised
the wisdom and justice of relating the penalties to be paid by the defaulting taxpayer to the
particular conduct that gave rise to the default and the circumstances in which s/he disclosed the
wrongdoing. The Group recognises that the Code of Practice for Revenue Auditors, which,
amongst other things, explains the penalties mitigation regime and defines the practical application
of this administrative understanding. It is the view of the Group that these are fair and proper
provisions and should be available to the taxpayer even a defaulting taxpayer as of legal right
and not by way of administrative concession. It would then be possible to determine by an
appropriate appellate procedure what were the particular rights and obligations of the taxpayer
in any given set of circumstances.
4.4. The Group considers that, in this light, the actual statutory penalties regime is anachronistic
and in need of some reform. In addition, the Group agrees with the approach taken in the Code
of Practice to the mitigation of penalties and believes it should form the core of a legislative
provision.

Penalties
(21) The Group recommends the incorporation of the 2002 Code of Practice penalties
scheme into the tax acts with some additional elements:
Mitigation to be permissible within the bands outlined in Revenues 2002 Code of

Practice for Revenue Auditors.
Category of Innocent Error, attracting no penalty, to be recognized and to be

distinguished from that of Insufficient Care on the basis that the taxpayer has a good
track record of tax compliance for the three previous years.
The abolition of the 200% tax-geared penalty for fraud, as it is considered an

anachronism and possibly un-enforceable.
Categorization and mitigation will be, as heretofore, by agreement and this should
be explicit in the legislation and explained in any correspondence between Revenue
and the taxpayer.
In the absence of agreement, categorization of the incorrect return will initially be

deemed to be Gross Carelessness. For a categorization of Insufficient Care or
Innocent Error to apply, the taxpayer must prove these categorizations before the
Appeal Commissioners, with the usual onwards route via a re-hearing in the Circuit
Court and to the High Court on a point of law. For a categorization of Deliberate
Default to apply, Revenue must prove it before the Appeal Commissioners.
A legislative provision to allow Revenue pursue in court the amount of penalty they
consider they are entitled to, i.e. not the full amount.
Current penalties regime should remain in place for all legacy cases as previously
defined.
46
5. Interest
5.1. The Group considered that the issue of interest was not outside its terms of reference
because of its relevance to and interaction with the operation of Revenue powers in a settlement
situation. There was an opinion that the high level of interest due over a number of years should
be reduced, e.g. at least 48% interest would be charged for tax liabilities from 1998/99.
5.2. In this context it was agreed that what is of concern here is, essentially, the statutory interest
that is added to the tax underpaid to reach a settlement figure in a negotiation between Revenue
and a defaulting taxpayer, and not the interest charge arising on late payments, which are clearly
a collection issue rather than relating to the establishment of a tax liability.
5.3. Interest on overdue tax (S1080 TCA 1997) is charged at a rate of 0.0322 per cent for each
day or part of a day; until 2002 this was defined as 1 per cent for each month or part of a month.
Finance Act 2002 change altered the rate from monthly to daily, the rate would be approximately
11.75% simple interest for tax outstanding for one year. There is no appeal mechanism provided,
although an appeal on the quantum of tax due would clearly affect the interest payable.
5.4. Separately, Revenue may seek penalty interest of 2 per cent per month or part of a month
where fraud or neglect is considered to be present (S1082 TCA 1997). The imposition of this
interest rate may be appealed to the Appeal Commissioners.
5.5. The logic of the existence of the penalty interest rate for fraud or neglect would seem to
indicate that the standard interest rate does not carry an acknowledged penalty.
5.6. The general position is that, where a tax default is discovered and tax is deemed unpaid (as
opposed to simply being overdue), Revenue will seek to recover the tax at stake, statutory interest
due on that tax and a penalty (to impose a civil punishment on the defaulting taxpayer). The
Group considers that the existing interest rate is unduly penal.
5.7. In the case where a repayment of tax is due, because the taxpayer has overpaid, the rate
of interest provided for, since the enactment of Finance Act 2003, is 0.011% per day or some
4% per annum (S865 TCA 1997).
5.8. In summary the rates are:
Overdue or underpaid tax 0.0322% per day (approx. 11.75% per annum).
Fraud/neglect 2.00% per month (approx. 24% per annum).
Overpaid tax 0.011% per month (approx. 4% per annum).
5.9. The Group agreed that the penalty interest rate should be abolished and that it is efficiently
redundant.
5.10. Leaving aside the penalty interest of 2% per month, there are two basic questions to be
addressed about interest: is the rate too high and should it be within Revenues powers to
compromise the statutory interest due?
47
Level of Interest rate

5.11. The rate is just less than 1% per month and has not changed since 1998, when it was
reduced by 0.25% per month. Basically, Revenue charge simple interest, e.g. if you are late by
two months you pay roughly 2% on the tax debt.
5.12. Clearly, Revenue is not in a commercial line of business. Commercial lenders are in a
different position as their brief is to charge whatever interest rates the market will bear in order
to make a profit for the shareholders. Rates which are designed to dissuade the customer from
availing of them as a matter of routine, such as credit card lending rates and unauthorized
overdraft rates, are generally in a range around 15% and can approach 20%. The standard credit
union charge is 1% per month on a loan, sometimes subject to a recoupment at year end.
5.13. Unlike some other jurisdictions surveyed, Revenue do not compound the interest charged,
i.e. charge interest on the outstanding tax and interest and while they treat interest as tax for the
purposes of collection they cannot add to an interest charge. Another factor is that Revenue
interest is not deductible against tax as a business expense, whereas bank interest is.
5.14. The Group felt that that the rate should be reduced partly because the due dates for filing
have been brought forward in recent years and because interest is not deductible for tax purposes,
unlike the position in the UK. The Group also noted that a number of other countries have rates
which are linked to an outside base rate with an additional percentage to protect revenue. Due
to the current low international interest rate environment, these are below 12%, see table below.
Country
Annual Rate
Link
Australia
%
11.82
90 day Bank accepted bill rate + 7%
Canada
8.60
90 day Treasury Bill + 6%
UK (Inland Revenue)
5.50
Not tied to a rate
United States
4.00
Federal short term rate plus 3%
5.15. New Zealand has no interest rate but a 10% penalty is levied for lateness and is repeated
every six months.
Compromise of Interest Rate
5.16. The Group examined the question of whether revenue interest should be capable of
limited compromise, within defined legislative parameters. The Tax Acts (S1065 TCA 1997)
specifically allow Revenue to mitigate any fine or penalty but do not explicitly allow Revenue to
mitigate or compromise statutory interest. Until 1998, Revenues practice had been to mitigate
administratively or compromise on the interest. This is borne out by the Fifth Report of the
Commission on Taxation where Revenue stated that in a settlement negotiation the inspector
would consider what penalties and interest are exigible.
5.17. Since 1998, Revenues stated policy has been that it cannot compromise interest and that
interest follows automatically from underpaid tax, once that is calculated and agreed. It is true
that this policy has not been rigidly followed in all cases, for example in relation to Revenues
48
approach to Bogus Non-Resident (BNR) Accounts, an earliest start date for the interest charge
was decided on, which was not always the date from which the underpayment had arisen.
5.18. Canada, Australia, New Zealand and the UK all have appeal mechanisms, through which
the taxpayer may contest the interest charge. For example, in the UK the taxpayer can appeal the
interest to the General or Special Commissioners, who may if it appears to them that the tax
carries no interest, set the determination aside; they cannot vary the magnitude of the interest
but can on facts found revise the date on which the tax ought to have been paid. It is
important to realise that the appeal body which examines the interest charged does not alter the
rate but looks, for example, at whether the due date was correct or whether there was an error
on Revenues part in the calculation or whether the interest was due at all. In other words the
General or Special Commissioners decide on a matter of fact rather than on whether they consider
the rate to be too high and do not mitigate or compromise the rate.
5.19. Our international comparisons indicate that other tax jurisdictions do not routinely mitigate
the interest charged, although in bankruptcy or other situations where the taxpayer cannot pay it
may be decided not to collect. In the UK it may be mitigated under care and management in
defined circumstances. There is no cap on interest in the jurisdictions consulted.
5.20. The Group recommend that the interest charged on overdue tax be capable of
compromise to a rate to restore the time value of the money in defined situations i.e. (1) Innocent
Error based on similar proposition to that relating to penalties, in that a good track record of
tax compliance for the three previous years would mean the full interest rate would be
compromised on the basis that the payment would be deemed to have resulted from an innocent
error and (2) a meritorious appeal case where a taxpayer made a genuine but mistaken
interpretation of a tax provision and a substantial interest charge was now due as a result of a
determination of the Appeal Commissioners. The time value of money would be expressed by
reference to the Consumer Price Index, similarly to what is done for Capital Gains Tax Indexation
purposes.
49

Interest
(22) The Group agreed that a fixed interest rate would be more easily administered in the
Irish system and that the fixed rate should be sufficiently high to discourage businesses
from deferring their tax payments to Revenue. On balance, they recommend a rate of
10% which represents the current Euribor rate of 2.5% plus 7.5%.
(23) That the 2% per month penal interest rate for fraud and neglect cases be abolished
on the basis that it is effectively redundant.
(24) That a limit be placed on the period for which interest will be charged on the lines of
the approach followed in BNR cases under paragraph 4.3 of Revenue Statement of
Practice SP Gen 01/01 effectively a roll up provision.
(25) That the interest charged on overdue tax be capable of compromise to a rate to restore
the time value of the money in defined situations, and that the time value of money be
expressed by reference to the Consumer Price Index, similarly to what is done for Capital
Gains Tax Indexation purposes.
(26) Defined situations would be as follows:
Innocent Error, based on similar proposition to that relating to penalties, in that a

good track record of tax compliance for the three previous years would mean the
full interest rate would be compromised on the basis that the payment would be
deemed to have resulted from an innocent error. This will be a rebuttable
presumption before the Appeal Commissioners and onwards.
Statutory recognition for a meritorious appeal case, so that where a taxpayer made
a genuine but mistaken interpretation of a tax provision and a substantial interest
charge was now due as a result of a determination of the Appeal Commissioners,
the taxpayer could apply to the Appeal Commissioners to ask that only the time
value of the funds should be restored to Revenue. If this was not found by the
Appeal Commissioners then Revenue would receive the full 10% rate.
(27) That each of these above compromise situation carve-outs to the standard interestcharging regime would be capable of appeal to the Appeal Commissioners for a
determination.
(28) Current interest regime to remain for legacy cases as defined heretofore.
6. Voluntary Disclosure
6.1. As already mentioned, the voluntary disclosure which is a concept referred to in S1086
of the TCA 1997 has not been statutorily defined. Again, it would seem that this crucial compliance
tool frequently referred to as the safe harbour principle is internationally recognised. In this
jurisdiction voluntary disclosure is a significant source of additional tax to the Exchequer and
allows for the efficient use of Revenue resources against those who are not prepared to make a
disclosure.
50
Number
Audit Settlements
Value (\m)
Average (\)
Published
Unpublished
Published
Unpublished
Published
Unpublished
2002 (Total)
272
11,667
35.41
159.94
130,184
13,709
2003 (to end June)
704
7,558
65.55
141.4
93,111
18,709
6.2. The unpublished category includes: those below the publication threshold, those cases
where penalties amount to less than 15% of the tax and those who have made a qualifying
voluntary disclosure. It would seem that a substantial proportion of the yield from unpublished
cases involves voluntary disclosure but many of the cases are small settlements.
6.3. Parameters of voluntary disclosure are in legislation in the following countries: New
Zealand, the Netherlands, UK (C&E) and Canada.118
6.4. Voluntary disclosure is now a significant feature in the determination and collection of tax
and penalties. The process is of value to Revenue in collecting tax and to the taxpayer in
regularising his/her affairs. The precise nature of voluntary disclosure qualifying and the benefits
which it confers could be defined by primary and subordinate legislation and any dispute as to
the adequacy of disclosure should be capable of resolution by an appropriate appeal procedure.
6.5. The right of a taxpayer to make voluntary disclosure is valuable and should not be lost
through accident or inadvertence. The taxpayer should be advised clearly of the termination of
the period within which a qualifying disclosure should be made.

(29) That voluntary disclosure should be defined in and its consequences regulated by primary
legislation supported, where necessary, by subordinate legislation and administrative
directions.
(30) To qualify for voluntary disclosure the following should be required:
118
Disclosure in writing.
Payment of 80% of the estimate of the additional tax within a reasonable time.
The provision to Revenue of full details concerning the disclosure within a

reasonable time.
In default of agreement the time appropriate for the delivery of such information to
be determined by the Appeal Commissioners.
New Zealand and Canada: both statutory and administrative; Netherlands and UK (C&E): statutory; Ireland: both statutory and
administrative.
51
(31) Any dispute to whether the disclosure is voluntary or otherwise complies with the
requirements of legislation and any relevant directions to be determined in the event of
a dispute by the Appeal Commissioners.
(32) That full voluntary disclosure should confer on taxpayers other than those involved in
legacy cases stipulated rights including the following:
Publication: exemption from publication of names as provided in S1086 of the TCA

1997.
Prosecution: non-selection of the subject matter of the disclosure for prosecution.
Penalties: the right to enjoy the prescribed rights of penalty mitigation under the
new proposed regime.
(33) Where Revenue propose to undertake the audit of a company separate notice should
be given to the directors of the company so as to ensure that such directors are not
deprived of an opportunity to make a voluntary disclosure in respect of their own affairs.
If no such notice is given to the directors the period in which voluntary disclosure may
be made by him or her shall not terminate with the audit of the company.
(34) The verification by Revenue officials of a particular item should be clearly designated as
a verification audit and such audit should not terminate any right to make an effective
voluntary disclosure at a later time.
7. Prosecution and Voluntary Disclosure

7.1. Where, following voluntary disclosure, the liability of a defaulting taxpayer to arrears of tax,
civil penalties and interest is determined and discharged Revenue do not seek to prosecute and
it is the understanding of the taxpayer that they will not prosecute for the offence (if any)
perpetrated in failing to pay the appropriate tax.
7.2. Voluntary disclosure confers safety from prosecution in the United States (subject to certain
exceptions), the Netherlands and in the United Kingdom. No such immunity is available in New
Zealand or Australia.
7.3. If voluntary disclosure is seen as delayed compliance with the tax codes and appropriately
punished by civil penalties there is much to be said for the continuance of this arrangement. There
would be, in any event, particular problems in utilising in criminal proceedings admissions made
by a taxpayer in the course of a voluntary disclosure which is encouraged by the provision of
legislative or administrative benefits.
52
The Groups Recommendation

Voluntary Disclosure and Prosecution
(35) The Group recommends that the practice of Revenue not prosecuting revenue offences
admitted in the course of voluntary disclosure should be continued.
(36) There should be no disclosure of information obtained by Revenue from a voluntary
disclosure to other agencies save as may be required by law.
8. Publication of Names and Prosecution of Offenders

8.1. The power (under S1086 of the TCA) to publish the name of defaulters is a valuable weapon
in the armoury of the Revenue Commissioners. The right to publish the name of defaulters is
subject to certain statutory exceptions which include the following:
Where the total amount of the agreed liability of the taxpayer does not exceed
\12,700, or
Where the taxpayer has made a full voluntary disclosure, or
Where the amount of the penalty does not exceed 15% of the tax involved in the
settlement.
8.2. The monetary limit aforesaid has remained unchanged since 1983. Indexed in accordance
with the CPI a comparable figure today would be \25,000. Indeed, indexed as per the GNP at
current market prices it would amount to \77,500.
8.3. The Group would be apprehensive that the maintenance of a comparatively low exemption
figure would result in longer lists of defaulters and the very real danger that publication would
lose its current effectiveness as a deterrent to tax evasion.

Publication of Tax Defaulters
(37) That the exemption limit aforesaid be increased to not less than \50,000.
(38) That the existing exemption limit be retained in respect of legacy cases as hereinbefore
defined.
9. Disclosure of Information by Revenue to other Official Agencies

9.1. The Group are conscious of the strong tradition of confidentiality within Revenue and the
benefit of that tradition to both Revenue and the taxpayer. However, this requirement of
confidentiality is not universal. The Disclosure of Certain Information for Taxation and other
Purposes Act 1996 permits the transmission of confidential information from Revenue to the
53
Criminal Assets Bureau. Again, Irelands participation in the international treaty network involves
the interchange of confidential information between tax administrations in different jurisdictions.
9.2. However, the Group are concerned by the provisions of the Company Law (Amendment)
Act 2001, and in particular section 18 thereof which provides that a Revenue officer may provide
information to the Office of the Director of Corporate Enforcement where the Revenue officer
suspects that an offence under company law may have been committed.
9.3. The Group are aware that a memorandum of understanding is in course of negotiation
between Revenue and the Office of the Director of Corporate Enforcement which will set out the
criteria under which Revenue will exercise their discretion in relation to the provision of
information under that Act.
9.4. The Group would be concerned to ensure that disclosure by Revenue to the Officer of the
Director of Corporate Enforcement would not undermine the value to both Revenue and the
taxpayer of the system of voluntary disclosure and the terms on which it is made.
9.5. It is the understanding of the Group that voluntary compliance would result in full
compliance by the taxpayer with tax laws and the preparation of accounts which would be filed
in the companys office. In that way voluntary disclosure and settlements made in pursuance
thereof should result in compliance with both the Income Tax Code and the Companies Acts.

Disclosure of information to Director of Corporate Enforcement and other Agencies
(39) There should be legislative protection from prosecution for a tax offence in a voluntary
disclosure case.
(40) That the Revenue Commissioners should not be required to provide information to the
Office of the Director in relation to the subject matter of a voluntary disclosure.
(41) In relation to information provided by Revenue to the Director under the Act of 2001
the Group recommends that a procedure similar to that119 operated by the Disclosure of
Information for Taxation and Other Purposes Act 1996 should be introduced to address
the information exchange interface between Revenue and the Director.
(42) To the greatest extent consistent with legal obligations, the taxpayer should be notified
of any information passed by Revenue to any other regulatory agency in relation to
his/her affairs.
10. Power to Remove and Retain Records.

10.1. The power of Revenue to retain documents removed by them (in accordance with various
provisions of the Taxes Acts) can cause considerable disruption to the taxpayers business. The
119
Nomination of a specific officer in Revenue to deal with disclosures
54
time limit is not regulated by statute but the operations manual published by the Revenue
Commissioners suggests a period of one month.
10.2. There does not appear to be any reason why, in the case of an investigation into the
adequacy of returns made by the taxpayer, the documents removed could not be copied and the
originals promptly returned to the taxpayer. In the case of an investigation with a view to criminal
proceedings where a book of evidence is being assembled it is understandable that the originals
would be retained by Revenue or the Director of Public Prosecutions and in that event it would
seem appropriate that copies be furnished to the taxpayer within not more than four weeks.
10.3. There may be disputes over the appropriateness of documents retained by Revenue, and
so the Group recommends that the Revenue Solicitor holds the records for one week to allow
adjudication by an officer of the DPP on the appropriateness of the relevance of the records. (In
the case of documents seized by the Competition Authority, disputes as to what is covered by
legal professional privilege are arbitrated by a senior legal adviser in the Competition Authority
who is a solicitor or barrister.)

Removal and Retention of Taxpayers Records
(43) There should be an express statutory limit on how long the tax authorities can retain
books and records taken from a taxpayer.120 The Group recommends that this should be
one month.
(44) Where the removal of records and computing equipment would prevent the taxpayer
carrying on his/her business in an orderly manner, then Revenue should be able to
examine the records at the taxpayers premises.
(45) A right of appeal to the Appeal Commissioners should be provided where the taxpayer
feels removal of records and computer equipment prevents him carrying on business.
(46) If there is a dispute over the appropriateness of documents taken by Revenue, the
Revenue Solicitor should hold the records for one week to allow for adjudication on the
appropriateness of the relevance of the records.121
11. Compliance with Orders

11.1. Every audit and investigation imposes some measure of cost on the taxpayer and
frequently will be the cause of some embarrassment to him. The proposals already made in
relation to the right of the taxpayer to challenge the duration of an audit or the relevance of
documentation sought should assist the taxpayer against any abuse in this regard.
120
I.e. not just for a reasonable time as in Section 905(2)(a)(D) of the Taxes Consolidation Act, 1997. Competition Authority
and Companies Office: limit is 6 months.
121
See also recommendation 13 regarding search in Chapter 3.
55
11.2. Concern has been expressed, however, about the situation of third parties from whom
information or documentation is sought in pursuance of the powers in that behalf vested in the
Revenue Commissioners. The Group is of the view that powers exercised by Revenue to obtain
information or documentation from third parties should be as specific as the circumstances permit.
Requests or demands for such information should not be cast in wide or general terms.

(47) It should be provided that any unreasonable request for information should be capable
of being objected to before the Appeal Commissioners.
(48) Where Revenue make a verification audit check, this will have no implications for a
taxpayer (who is a third party in the matter under investigation) in relation to voluntary
disclosure and this should be notified to the taxpayer.
(49) The Group notes that the Revenue Commissioners have said they will consider applying
the civil service redress scheme when it comes into operation. There may be some merit
in making a payment in acknowledgement of the inconvenience caused where a taxpayer
has been significantly inconvenienced by Revenue error, inaction or delay.
(50) In all cases where information is provided by a third party subject to a statutory provision,
it should be made explicit that the information provider cannot be sued for breach of
client confidentiality.
12. Streamlining of Existing Powers

12.1. The legislative history of the Income Tax Code in Ireland extends for a period of more
than 150 years. Many of the existing powers were introduced over a lengthy period to achieve
different purposes or support different operations. Whilst careful drafting has avoided the
confusion which might have otherwise arisen there are important areas in which, the Group
believes, greater clarity could be achieved.
12.2. Certain important legislative powers may be invoked for purposes of a criminal
prosecution. Where it is determined to conduct such an investigation it is appropriate that the
taxpayer concerned should be duly informed.
12.3. The Group believes that there should be a clear differentiation and demarcation between
a civil investigation, that is to say, an audit or investigation into the accuracy of returns made by
the taxpayer with a view to recovery of tax underpaid together with appropriate penalties and
interest and a criminal prosecution.
12.4. It is in the interest of Revenue and of the taxpayer that such a distinction should be drawn
clearly. There is an inherent conflict between the civil investigation and the criminal one. The civil
investigation has the purpose of recovering tax and penalties due by law to the State. The criminal
proceedings have their purpose in the punishment of a wrong doer. If Revenue were to proceed
56
with a civil investigation there is the danger as they fully appreciate that negotiations in the
course of the civil investigation would taint subsequent criminal proceedings. In particular, the
voluntary disclosure procedure and any evidence obtained in pursuance of it would certainly
militate against a successful prosecution.
12.5. From the point of view of the taxpayer justice requires that s/he should be informed of
the nature and purpose of investigations. At the least s/he should be in a position to obtain any
appropriate professional advice which s/he may think fit and in any event s/he may have to be
warned in accordance with the ordinary norms of criminal investigation of the dangers of
incriminating herself/himself.
12.6. The civil investigation, the status of the officers by whom it would be conducted and the
powers available to them should be, in the view of the Group, segregated and distinguished from
the situation which applies in a criminal investigation. Revenue must inform and keep informed
the taxpayer of the nature of the audit/investigation to which his/her affairs are being subjected.
12.7. This distinction would enable the taxpayer and his/her advisor to know the limits of the
powers which may be invoked and the sanctions which could be applied as a result of the
particular investigation.
12.8. The Group feels that consideration should be given to a further refinement to create a
subdivision within civil investigations. There is in practice a distinction to be drawn between what
are sometimes described as routine audits and tax investigations. In the former case the
Revenue officer concerned may be seeking merely verification or clarification in relation to
particular financial transactions which occurred within a given financial year. Investigations may
extend to a wide range of taxes and cover a period of years. It is proposed that in the latter case
more extensive powers are available to the authorised officer than in the former.
12.9. The Group are conscious of the fact that streamlining of this nature raises difficulties in
relation to legislative drafting and administrative procedures. However, the scheme in general
which the Group would wish to see achieved would be as set out below:
12.10. It is possible to stratify the statutory powers into broad groupings which reflect the impact
of the powers on taxpayer as follows: (1) Less intrusive powers used in audit which in this report
are described as audit powers; (2) more intrusive powers which are used in investigations with a
view to financial settlement which are described as investigation powers; and (3) more intrusive
powers which are used in prosecutions which are described as prosecution powers.
57
Selected Revenue Powers

Less Intrusive Powers mainly used
in audits
More Intrusive Powers mainly used

in investigations, including special
investigations

enquiries
900 Production of books etc. by

taxpayer
905(2A) Search Warrant
901 Application to High Court for

production of books etc. by taxpayer
908A District Court: Revenue

Offence Information from financial
institutions

deduction from certain subcontractors
904C- 904J: Power of inspection:
assurance companies
investment undertakings
claims by authorised insurers
claims by qualifying lenders
claims by qualifying insurers
qualifying savings managers
dividend withholding tax
professional services
Powers used in cases selected for

prosecution
902A Application to High

Court for Information from
Third Party
905122 Inspection of documents

and records
904A Power of Inspection: DIRT123

enquiries and amend assessments
906A Information from financial

institutions
907 Appeal Commissioner:
Information from financial institutions
908 High Court: Information from
12.11. The table above illustrates how this might be done with existing powers.
Audit Powers
12.12. The first group is those audit powers used to examine returns and which are exercised
in writing by an officer from a Revenue office. These would include powers to request returns
and powers to request and copy records. In addition the powers to assess, to list cases for appeal
and to mitigate penalties would fall into this category. The charging of interest in respect of late
payment of tax would also be included for completeness sake. The category would also comprise
audit powers used to verify returns by examining records at the business premises of the taxpayer.
These examinations would normally relate to a defined period of assessment. These would include
122
123
Subsections such as 905(2)(a)(iv)(B) and 905(2)(e) are, however, potentially intrusive.

Historically, this was seen as a very intrusive power, but on an ongoing basis the DIRT audit is likely to become routine.
58
the power to enter business premises including the power to enter the portion of a private
residence used for business purposes. It would include the power to examine, remove and retain
records, including computer records. The power to require assistance from individuals on the
premises would be included. The category would also include the power to inspect property and
to obtain information from third parties other than the financial institutions.
Investigation Powers
12.13. The second group would include powers used to investigate tax returns in depth to
obtain the correct tax payment. Such investigations may extend over a number of years of
assessment and would normally last for an extended period of time. The powers would include
the search of premises for records, the power to request Garda assistance124 and the power to
enter private residences on foot of a court order and the accessing of information on specific
taxpayers or a class of taxpayer from financial institutions. Control powers such as those allowing
Revenue to deem transactions as having been purely for tax advantage purposes under antiavoidance legislation would be included.
Prosecution Powers
12.14. The final group would be those powers used only in the course of an investigation for
criminal prosecution purposes in relation to Revenue offences. This category would include the
power of personal search, removal of records and equipment and powers to question
witnesses/suspects.

Streamlining of Powers
The overall approach to streamlining which they recommend is that:
(51) The gradation of powers from less intrusive to more invasive should be made transparent
in the legislation in line with the transitions from audit to investigation and investigation
with a view to prosecution.
(52) The legislation should specify what third party supervision and internal revenue
authorisation levels are required to activate the more intrusive powers.
(53) Existing prosecution powers125 should be separated from the other powers. This will
protect the rights of the taxpayer but should also help with the alignment of procedures
to ensure that evidence collected in a revenue investigation does not become tainted by
self-incrimination and therefore inadmissible in a criminal trial. Also there should be an
(54) The appropriate avenue of appeal applying to each of the three categories above should
be clear from the legislation.
124
125
Currently associated with the use of S903, S904, S905

Currently S905 2A and S908A TCA 1997 are used exclusively for prosecution cases.
59
CHAPTER 4
Need for Further Powers
1.
Introduction
1.1. The terms of reference required the Group to consider the case for new powers including
powers to establish tax liabilities and powers of investigation with a view to prosecution. The last
independent review of Revenue powers was conducted in the 1980s as part of the work of the
Commission on Taxation.126 Since then, there have been some fundamental changes in the way in
which the taxation system is administered. Chief amongst these was the move to self-assessment,
commencing in 1988. Apart from those taxed under the PAYE system, almost all other taxes and
duties come within the self-assessment system. In the short time allocated for this review it was
not possible to provide an exhaustive assessment of any shortfall in current Revenue powers.
1.2. The Group accepts the need for powers. The powers are considered by the Group to be
effective as a deterrent and to serve broadly to reinforce compliance culture. Powers are necessary
both to tackle evasion and to underpin the self-assessment system. While the previous chapter
sought to restrain the use of powers to protect the rights of taxpayers subject to their use, it is
also necessary to take into account the rights of taxpayers who pay their tax on time. The use of
powers against tax evaders protects against the injustices that result from distortions in the market
place that arise from tax non-compliance. Thus the use of powers against evasion serves to
reinforce compliance. Since the introduction of new powers in 1999, there is a clear perception
and understanding abroad that Revenue can access financial and other records more readily now
than heretofore and this is believed to lead to greater levels of disclosure both prompted and
unprompted.
1.3. A number of submissions addressed the issue of the need for further powers for Revenue
it was submitted that in general the existing powers were sufficient but that there was a case
for strengthening of powers in three areas: (1) reporting of payments (2) offshore assets and (3)
investigation with a view to prosecution.
1.4. The comparative study undertaken by the Group indicated that Revenue powers are
generally on a par with those of other tax administrations.127 As a general principle the Group
considers that Revenue should fully exploit their existing suite of powers when faced with a novel
evasion situation and consider a variety of approaches including those which would be used by
126
127
Chapter 12 of the Fifth Report of the Commission in relation to Information Powers of the Revenue Commissioners.
With the exception of (1) automatic reporting in some other jurisdictions and (2) other jurisdictions consulted had access to
records of resident controlled foreign entities. The position regarding automatic reporting of interest in other countries is shown
at Appendix G.
61
a competent auditor of company accounts rather than seeking a new power specific to the
situation on hands. It could be argued that to date the development of the powers to tackle
evasion has been reactive. However, the Group considers that careful scrutiny of international
material should assist Revenue in the early identification of new forms of tax evasion.
1.5. There is now an increased flow of third party information to Revenue from a variety of
sources128 including international tax information exchange agreements and tax treaties. In
addition the EU Savings Directive, which will come into force in January 2005, will require the
reporting to other jurisdictions of interest earned by non-residents. Recently introduced provisions
for information exchange between regulatory agencies in Ireland will also bring information to
Revenue in relation to the possible commission of revenue offences. The Group considers that
the use of this information with proper information security129 should reduce the need for the use
of direct information powers to intrude on compliant taxpayers.
1.6. In general it should be clear that Revenue has the right to relevant information.

General Right to obtain information
(55) The right of Revenue to obtain the documentation and information relevant to the
establishment and collection of all taxes (subject to appropriate safeguards and
authorisations) and the duty of taxpayers to provide such documentation and information
must be accepted and should be incorporated into legislation.
2. Automatic Reporting of Information by Third Parties

2.1. The Group accepts that there are two areas in which Revenue should be entitled to obtain
information from third parties in relation to the affairs of a taxpayer automatically and without the
necessity of any request from Revenue in that behalf. The first of these relates to interest earned
on deposits in financial institutions and income earned on other financial transactions and the
second relates to payments made to taxpayers by Government departments and agencies.
2.2. The 1990 OECD Report on Taxpayers rights and Obligations acknowledged that
the use of taxpayer identification numbers and computerised matching techniques
are a useful means of combating tax evasion and avoidance. Citizens, however, may
feel a certain unease at the powers that such techniques provide to the tax authorities
to build up comprehensive data banks on their personal and professional lives.130
2.3. Before recommending these provisions the Group reflected on these concerns and sought
reassurance that:
128
129
130
Revenue could properly manage the increased inflow of data as historically there have
been concerns about Revenues ability to process adequately certain information.
See Appendix I: Current Sources of Information to Revenue.

See proposals in regard to safeguards on information disclosure in Chapter 3.
Taxpayers Rights and Obligations OECD 1990: Part II General Considerations para 2.10.
62
Revenue could ensure full confidentiality for any such information and to guard against
inappropriate use.
2.4. The Group was assured by Revenue that they are at an advanced stage of preparation for
comprehensive data matching under the ESKORT system131 and that very strict controls
including authorised access levels operate within Revenue to restrict access by revenue officials
to limited and relevant taxpayer information. Revenue have the capacity to interrogate their
systems to identify any access made by officials to electronic information at any time.
2.5. The flow of information from national and international sources should enable Revenue
and they are optimistic that it will to target those taxpayers whose affairs should be investigated.
More particularly, Revenue should be able to identify the particular issues, expenditures or
allowances which would require verification or explanation. Targeting of this nature should
result in queries from Revenue being directed to specific issues rather than audits which might be
wide-ranging and protracted.
3. Automatic provision of information on interest payments on deposits

in financial institutions132 and income earned on other financial
transactions133 referenced by PPSN number
3.1. Given the international trends and the increased third party flows to Revenue generally the
Group see no objection in principle to the automatic reporting of all interest.134 Clearly the
existence of a bank account and the unexplained accumulation of substantial funds may be
significant in any investigation carried out by Revenue. On the other hand, it is recognised that in
times of low interest rates there may not be the same compulsion to place money on a deposit
earning account.
3.2. The Groups proposal in relation to interest and income would restore a legislative power
which previously existed and was effectively repealed by S31 of the 1986 Act.135 Experience of
the evasion of both DIRT and tax on the underlying deposits, strongly indicates that domestic
financial institutions not only deposit takers, but also life assurance companies and collective
funds are used to hide untaxed funds. At present, Revenue can only get access to information
held in a financial institution if there is prima facie evidence of evasion involving an
account/investment in the institution. Requiring these institutions to report annually on their
customers deposits/investments would greatly assist tax compliance by deterring the use of
onshore and very easily accessible accounts and financial products to hide undeclared
income/gains.
131
132
133
134
135
See Appendix B on the Eskort system.

Automatic reporting of information on taxpayers sources of income by financial institutions in USA, Sweden, New Zealand,
Netherlands.
i.e. capital gains and income arising on the encashment of other financial products. Effectively this is an extension of the
intermediary provisions in the current code.
The Savings Directive will require reporting to other jurisdictions on interest earned here by non-residents and this proposal
could be addressed in the context of these international developments.
In fact, in the context of a changeover to self-assessment, the International Monetary Fund, in 1986, had recommended that
the Revenue Commissioners should receive details of interest paid by financial institutions. This was also the view of the
Commission on Taxation Fifth Report paragraph 12.53.
63
De Minimis Issue
3.3. The Group considered the possible advantage of reporting limits where the amounts earned
were in excess of a threshold. Compliance with automatic reporting involves third parties in
significant compliance cost. Overall, it was felt that the problems of segregating accounts for the
financial institutions and the danger of taxpayers avoiding compliance by subdividing accounts
rendered this solution unattractive. The lack of a de minimis will undoubtedly impose a burden,
especially for smaller financial institutions and their customers.
3.4. The Group also notes that there may be social and economic consequences of this provision
which should be considered by policymakers. If policymakers consider that the social and
economic consequences of such a provision would be unacceptable, a threshold could be
determined by Ministerial order, subject to such safeguards as might be considered necessary.
4. Automatic reporting of Payments made to taxpayers by Government

Departments referenced by PPSN number.
4.1. At the present time the Revenue Commissioners may, subject to S910 TCA 1997 Act,
request any Minister of the Government or any body established by or under statute to provide
them with such information in the possession of that Minister or body in relation to payments for
any purpose made by that Minister or that body as the Revenue Commissioners may specify in
the notice.
4.2. The Group proposes to extend in practice what exists in principle, that is to say, the right
of Revenue to receive information concerning payments made by the State and State agencies to
taxpayers. A significant flow of payments pass through the hands of Government Departments
and other State agencies. One of the background criticisms levelled at public bodies in the context
of the PAC Sub-Committee Inquiry into DIRT evasion was the lack of co-ordination between the
bodies concerned. This criticism has been responded to by information sharing provisions being
contained in some recent legislation.136
4.3. Whereas Revenue has the power to request information from Government Departments
and statutory bodies regarding payments that they make, it is considered that details of all such
payments made by or through all such bodies should be provided on an automatic basis i.e.
without being requested and should include the payees PPSN. Again, as with automatic
reporting by financial institutions, automatic reporting of these payments would contribute to tax
compliance.
4.4. It is clear that it would take very considerable time to set up the mechanisms by which the
information sought could be provided automatically. It would be more practical from the point of
view of the supplying agency and more manageable from the point of the Revenue
Commissioners to arrange this information flow by reference to different agencies or functions
over a period of time.
136
For example section 17 of the Company Law Enforcement Act 2001 in conjunction with section 21 of the Companies Act
1990 (as amended by section 53 of the Companies (Amendment) (No 2) Act 1999); and section 33AK of the Central Bank
Act 1942 as inserted by section 26 of the Central Bank And Financial Services Authority of Ireland Act 2003.
64

Automatic Reporting to Revenue
(56) The recommended scheme for automatic reporting is:
For all new accounts/investments in Irish financial institutions the institution should
be required to obtain and record the account holders/investors personal public
service number (PPSN), or foreign equivalent, and include such number in the
automatic reports made to Revenue.
Deposit takers (i.e. Irish banks, building societies, credit unions and the Post Office
Savings Bank) would be required to make an automatic annual report to Revenue
in respect of all resident individuals who earn deposit interest in a tax year the
report to include the name and address of the beneficial owner of the interest, the
account number(s) and for new accounts the PPSN and the gross amount
of such interest (no de minimis figure is proposed principally to deter account
splitting);
Irish life assurance companies and collective funds would also be required to make
an automatic report to Revenue of all policies/investments which are cashed in,
matured, redeemed, surrendered, transferred or otherwise disposed of by resident
individuals in a tax year the report to include the name and address of the
beneficial owner of the investment at the time of cashing-in etc., the account/policy
number(s) and for new investments the PPSN and the amount involved;
In future details of all payments made by Government Departments and their

Agencies to taxpayers referenced by PPSN numbers should be transmitted to
Revenue,
Subject to the provisos that:
The statutory obligations as aforesaid should not take effect until the Minister for
Finance has been satisfied that the information technology systems of the Revenue
Commissioners are capable of receiving and handling such information and utilising
it effectively.
Taxpayers should have available on request particulars on the information supplied

to Revenue in accordance with the proposed obligation.
Revenue, the Department of Finance and representatives of the financial institutions

should review the operation of automatic reporting not less than three and not
more than five years after the introduction of the obligation to ensure the system is
operating effectively and economically.
It should be determined that there are no unduly adverse social or economic

consequences of this proposal. If policymakers consider that the lack of a de minimis
provision would have social and economic consequences, a threshold for interest
reporting could be determined by Ministerial order subject to such safeguards as
might be considered necessary.
65
5. Offshore Assets: Powers to establish beneficial ownership137 of

offshore assets over which a resident entity has control
5.1. There are particular difficulties in obtaining material documentation and information in
relation to transactions which take place outside the State by or on behalf or for the benefit,
directly or indirectly, of taxpayers resident in this jurisdiction.
5.2. The information powers contained in sections 900, 901, 902A, 906A, 907 and 908 do
not apply to Irish owned foreign resident subsidiaries of Irish residents. The Group considers it
unreasonable for a taxpayer to cite a perceived inability to access documents and records from
a non-resident entity when in fact that entity is under the control of the taxpayer concerned.
Clearly there are cases in which information held by a foreign resident subsidiary may be relevant
to the tax liability of an Irish resident. The Group does not consider that it would be unduly
burdensome to require the Irish resident to provide information in relation to the foreign entity
controlled directly or indirectly by him. The information powers of other jurisdictions consulted
by the Group included access to records of resident controlled foreign entities.

Offshore Assets
(57) Revenue should be given the power to obtain documentation and records in the power,
possession or procurement of a non-resident entity over which a person resident in this
jurisdiction has control. The existing statutory definition of control should apply in this
context.
(58) Revenue should first seek the information from the taxpayer direct and, only if the
taxpayer refuses, then make an application to the High Court.
(59) The Court may refuse the application if it is satisfied that it is impracticable for the
taxpayer to procure the required documentation or records.
6. Payments for Services Provided from Countries with which Ireland

does not have a Tax Treaty
6.1. Where information which is reasonably required to verify the bona fides of an off-shore
payment is sought by Revenue under sections 900/901 or 902/902A and is refused, then the
deduction claimed by the taxpayer in respect of that payment can be challenged by Revenue
under the wholly and exclusively rules. However, where the taxpayer can produce commercial
documentation to support the payment, Revenue have stated that they have had, on occasion,
difficulties in checking the commercial reality.
6.2. Revenue already has sufficient scope to disallow a business deduction if it amounts to a
sham. Appeals before the Appeal Commissioners should in most instances constitute sufficient
protection for Revenue in addressing their concerns. There may be situations, however, where
documentation is presented which on the face of it looks plausible but turns out not to be. In
137
All tax authorities consulted stated they have access to records of resident controlled foreign entities.
66
relation to payments to residents of countries with which Ireland has Double Taxation Treaties or
formal Exchange of Information arrangements, the Group consider that Revenue would have the
scope to verify the payment to the non-resident payee with the foreign tax authority.
6.3. A difficulty arises when an Irish resident taxpayer claims to deduct an expenditure made in
respect of services rendered by a person resident in a country with which Ireland has no Double
Taxation Treaty or formal Exchange of Information Arrangement countries frequently, though
not always accurately, referred to as tax havens.
6.4. If Revenue can obtain reliable information in relation to the nature of the expenditure and
the identity of the person by whom it is provided, they may be in a position to challenge the
payment on the grounds that it was not wholly and exclusively expended for the purpose of
the trade of the taxpayer. Alternatively, it might be possible to challenge the expenditure on the
grounds that it formed part of a transaction which constituted a sham.
6.5. Until arrangements can be made to gain the necessary access to information and
documentation in the remaining tax havens the Group believes that payments made to those
jurisdictions by a taxpayer for services rendered should be subject to a arrangement whereby tax
would be capable of being assessed at standard rates unless a person can satisfy Revenue of the
bone fide nature of the transaction.

Payments for services provided from countries with which Ireland does not have a tax
treaty
(60) Taxpayers to satisfy Revenue that payments for services provided from countries with
which Ireland does not have a tax treaty are bona fide commercial transactions in the
absence of which, tax should be assessed at standard income tax rates on the payment.138
(61) Provision for the refund of the tax if and when the Irish resident taxpayer satisfies Revenue
that the payment was bona fide made for services properly provided for the trade carried
on by the taxpayer by a supplier whose identity was established to the satisfaction of
Revenue.
Some other Issues Considered in this General Context

6.6. Consideration was given as to whether powers should be extended in other areas. The
Group considered whether there should be a penalty where a tax avoidance scheme failed. A
variety of views were considered. The Group did not agree that a penalty be introduced for a
number of reasons. These included:
138
There is an existing interest and penalty regime which imposes substantial cost on
taxpayers engaging in such schemes which fail;
There is no agreement regarding the boundaries of tax avoidance;
This would operate like a deemed withholding tax.
67
Tax law can be very difficult to interpret and such a scheme might fail or succeed on
very narrow grounds and it seems inherently unfair to impose substantial penalties in
such situations;
Imposition of a penalty in so called S811 cases would result in a taxpayer incurring a

penalty despite having fully complied with the law but failing on a point of opinion.
6.7. The Group debated whether any person who in the course of their trade or profession was
concerned with the making of an offshore settlement should be required to report the transaction
to Revenue identifying the settlor and the trustees where the trustees are not resident or ordinarily
resident in Ireland. The Group considered that such a compliance burden on third parties was not
warranted given the existing S808 power and the fact that a settlement might be made directly
with an offshore entity.
7. Additional Prosecution Powers

Introduction
7.1. Extensive powers have been granted by the Oireachtas in recent years to the Garda and
to a variety of agencies, such as the Competition Authority, the Irish Financial Services Regulatory
Authority and the Office of the Director of Corporate Enforcement. The Group considered
whether many or all of the powers available to these agencies should be also available to Revenue.
Such powers might include the power of arrest, holding for questioning and obtaining information
from witnesses under oath.
7.2. It was recognised that many of these powers have been introduced in response to issues
of pressing public concern, and have been of great assistance in resolving those matters
satisfactorily from the point of view of the public interest.
7.3. The Group felt that it would not be possible to carry out a comprehensive review of these
powers in the time available. Nevertheless, the Group noted, for example, Professor Dermot
Walshs139 observations that the powers of the Garda to arrest and detain someone for
questioning in connection with a serious crime (not against the State), as opposed to simply
charging them, are relatively recent arrivals. The Group understands that the use of such powers
has not always been uncontroversial. The Group also notes that the exercise of these powers by
agencies has on occasion been the subject of successful appeals to the Courts. In that light, there
must be some concern at the granting of wide-ranging and relatively unfettered powers to any
agency without extensive thought or concern for the rights of individuals or businesses.
History and Context of Prosecution Powers
7.4. Historically, before 1983 the prosecution of tax offences was based on the common law
offence of defrauding Revenue. Prosecutions were rare. Some prosecutions based on nonRevenue offences such as not keeping proper books and records were directed against more
serious cases of tax evasion. Section 94 of Finance Act 1983 introduced a new range of Statutory
Offences to tax legislation. The number of offences has been increased by subsequent Finance
Acts. The investigation of offences under section 94 was based on the existing Revenue powers
to establish liabilities principally section 18 of the Valued Added Tax Act 1972 (Inspection and
139
In Chapter 4: Arrest; Criminal Procedure, 2002.
68
Removal of Records) and Section 34 of the Finance Act 1976. In 1992, existing powers were
harmonized under the various tax heads. While there was some reference to records being used
in later criminal proceedings, there was no clear provision for the use of revenue powers in
investigation with a view to prosecution. Prosecution for revenue offences was carried out through
An Garda Siochana and the Director of Public Prosecutions. Revenue acted as the complainant.
7.5. In 1996, following a review of the existing prosecution structure, Revenue took a direct role
in the prosecution of tax offences. The following measures were put in place:
A special Prosecutions Unit was established in Investigation Branch to gather evidence

with a view to reporting cases involving possible revenue criminal offences to the
DPP, via the Revenue Solicitor.
Since 1997 a senior officer of the Director of Public Prosecutions Office is available
to the Revenue Commissioners for the purposes of case referral and consultation.
Finance Act 1999 introduced specific prosecution powers for the first time S908A
(power to obtain information from financial institutions) and S905 (2A) (search warrant
power) to the TCA 1997.
Finance Act 2003 inserted three new sections into the TCA 1997 to:
(1) Create a criminal offence of falsifying, concealing, destroying or otherwise
disposing of material by a person where the person knows, or suspects, is or
would be, relevant to the investigation of a revenue offence.
(2) Establish substantial presumptions mainly relating to documents.140
(3) Permit a judge to give documentary information (charts, transcripts, summaries)
to juries where a revenue offence is being tried on indictment, in order to assist
then in their deliberations.
7.6. Revenues investigation of tax offences with a view to prosecution is subject to a number
of constraints inherent in any criminal investigation:
Requirement to produce testimony from witnesses.
Privilege against self-incrimination.
The right to silence.
The unavailability of the power of discovery of documents in criminal

proceedings.141
The right to have criminal proceedings instituted with reasonable expedition.
7.7. If the investigations were being carried out by the Garda Sochana, they would have
available to them the powers set out in sections 4 to Section 10 of the Criminal Justice Act 1984,
subject to the safeguards provided in sections 5 and 7 of that Act.
140
141
The Law Reform Commission has stated in regard to these statutory presumptions that:
Such provision is constitutional. However, on policy grounds, the Commission feels that the legislature should be
cautious in making changes to procedural and evidential rules, for revenue offences. An important policy consideration
is that a significant aspect of a criminal opprobrium which the offender attracts may be eroded if it is perceived that
special rules had been imposed to facilitate conviction.
Clarified in DPP v. Sweeney, Supreme Court 9/10/2001.
69
7.8. It is a complex task to determine the extent to which the powers available to An Garda
Sochana under various provisions of the criminal law should be made available to investigators
who are not members of An Garda Sochana. Some of the more draconian powers such as those
used in the case of drug offences may not be appropriate to use in the investigation of revenue
offences.
7.9. There have been a number of developments in the criminal law which are available to
members of An Garda Sochana:
A new power of search under warrant under section 48 of the Criminal Justice (Theft
and Fraud Offences) Act 2001.
Power to apply to the District Court for an order to obtain material from a third party
under section 52 of the Criminal Justice (Theft and Fraud Offences) Act 2001.
Power of arrest without warrant on suspicion of an arrestable offence under the

Criminal Law Act 1997142.
Search and Production Powers

7.10. The Group believes that, at the present time, it would be more prudent to deal with
searches in the manner provided in Chapter 3. The Group recognises, however, that extensive
powers to search premises for, or otherwise procure, documentation in connection with criminal
proceedings have been conferred by recent legislation. The attention of the Group has been
drawn in particular to the Criminal Justice (Theft and Fraud Offences) Act 2001 sections 48 and
52; the Company Law Enforcement Act 2001 section 29 and the Competition Act 2002 section 45.
Whilst these legislative provisions may be helpful in indicating public policy generally in relation to
the prosecution of offences the Group would not accept that the powers conferred on one agency
would necessarily be appropriate to another agency. Distinctions between different agencies may
be subtle but very real. The Director of Corporate Enforcement has the task of ensuring that
persons who choose to take the benefit of incorporation and in particular incorporation with
limited liability comply with all of the requirements of the Companies Acts. The number of
undertakings and activities which would fall under the scrutiny of the Competition Authority would
be fewer and perhaps better defined than those suspected of wrongdoing under the tax codes.
The Group recognises the value of the Criminal Justice (Theft and Fraud) Offences Act 2001, as a
possible model but again the distinction must be drawn to the combined function of pursing both
civil and criminal liabilities imposed on the Revenue Commissioners where the Garda Sochana
are limited to criminal matters.
7.11. The Group recognises that a search carried out in accordance with law can be very
intrusive. This must be particularly so where the search concerns a tax offence which may involve
the scrutiny of a vast array of documents. Such searches can be very disruptive, expensive and
embarrassing for the taxpayer.
7.12. The Group considers that it would be desirable that there should be further exploration of
the problems actually encountered by Revenue in carrying out searches or procuring
142
The Group considered whether a power to detain for questioning or to allow Revenue put their case to the accused should
be given to Revenue. It is noteworthy that other agencies access Garda powers by the mechanism of having a seconded
member of An Garda Sochana on their staff and utilise Garda facilities (i.e. stations) to operate these powers with the benefit
of the legislative safeguards built into the criminal justice system.
70
documentation relevant to a prosecution. It may be possible to devise some alternative procedure

or at any rate some more clearly focussed power which would meet the ascertained needs of the
Revenue Commissioners without unduly intruding on the business or family affairs of the taxpayer
who is presumed to be innocent of any wrongdoing.
Power of Arrest
7.13. Even if powers of arrest were conferred upon to Revenue investigators it would be
necessary for them to procure facilities from the Garda Sochana for the detention and
interrogation of the arrested taxpayer. If, as the Group understands the position, it is the
Commissioner of An Garda Sochana who will bear the ultimate responsibility and the Station
Sergeant the immediate care for the person arrested, it would seem more appropriate that the
arrest should be carried out by a member of An Garda Sochana at the request of the official of
the Revenue Commissioners and on the basis of the information provided by him or her. The
Group would, however, expressly recommend that appropriate provisions should be made either
in primary or subordinate legislation to permit an authorised officer of Revenue to interrogate the
suspect but subject of course to all of the safeguards which would apply if such interrogation
were to be carried out by a member of the Gardai.
7.14. Only one of the tax administrations consulted the Netherlands had the power of arrest
for questioning of a tax offender.143 It is noteworthy that other agencies may access such Garda
powers by the mechanism of having a seconded member of An Garda Sochana on their staff
and therefore can utilise Garda facilities (i.e. stations) to operate these powers with the benefit of
the legislative safeguards built into the criminal justice system.144
7.15. The Garda have a general power of arrest without warrant in relation to offences which
are defined as arrestable offences (ie offences which carry a jail sentence of 5 years or more).
This is provided for in section 4 of the Criminal Law Act, 1997. Many revenue offences, including
those for VAT, Direct Tax and Capital Tax fall within the arrestable offence definition.
Consequently, if a member of the Garda Sochana were investigating such an offence, he/she
could arrest the suspect and detain the person for questioning in accordance with and subject to
the safeguards in section 4 of the Criminal Justice Act 1984. However, this power is not available
to Revenue officers carrying out an investigation of revenue offences.
7.16. Four of the seven agencies, ODCE, the Competition Authority, CAB and Garda have the
power of arrest and detention of suspected offenders for purposes of obtaining information,
including questioning of suspect. In addition, the same agencies have power of arrest and
detention of suspected offenders for purposes of advising of a criminal charge.
7.17. It could be argued that Revenue investigators, therefore, need to have the power of arrest
without warrant akin to section 4 of the Criminal Justice Act 1997 and section 4 of Criminal Law
Act 1997 to be able to bring the arrested person to a Garda station. Appropriate arrangements
between Revenue and the Garda Sochana would be required in relation to both arrest and
detention, in keeping with the Criminal Justice Act 1984 (Treatment of Persons in Custody in Garda
Sochana Stations) Regulations 1987. Appropriate amendments to those Regulations would be
143
144
UK (C&E) has it also but it is a customs administration.

Members of the Garda Sochana are seconded to the Office of the Director of Corporate Enforcement and to the Competition
Authority.
71
required to allow for the detention by the Garda and questioning by revenue officers investigating
the revenue offence.
Power to Obtain Information under Oath
7.18. The right to silence can be overridden by legislation. A number of authorities which
undertake investigations have a power to summon witnesses and to examine them under oath.145
The powers to examine witness under oath are used primarily in public interest inquiries: not in
criminal investigations. It is the understanding of the Group that statements made (whether under
oath or otherwise) by potential witnesses are not admissible in subsequent criminal proceedings.
Fair procedures require that the witness must be produced in the proceedings and give his/her
evidence under oath subject to cross-examination by or on behalf of the accused. A statement in
the nature of an admission or confession made by an accused is not admissible in evidence
against him if it is made under compulsion of law.146
7.19. A procedure by which potential witnesses in criminal proceedings are interrogated under
oath as to the evidence which they might give as part of the criminal investigation would be a
novel concept in Irish jurisprudence. The Group would not recommend granting this unique
power in relation to the investigation of tax offences.
Access to Telephone Records in a Criminal Investigation
7.20. Section 98 of the Postal and Telephone Services Act 1983, as amended by the Interception
of Postal Packets and Telecommunications Messages, (Regulations) Act 1993, provides that licensed
operators of a telephone system may disclose information concerning the use made of their
telecommunications services by other persons, to a Chief Superintendent of the Garda Sochana
or a Colonel in the Defence Forces. Revenue is not a party to whom disclosures can be made.
By contrast, tax investigators in some other jurisdictions can get such information from the Irish
authorities under the Mutual Legal Assistance procedure by means of section 51 of the Criminal
Justice Act 1994. This type of information has been particularly valuable to them in the
investigation of serious VAT fraud. The Group considers that access should be provided to
Revenue in the context of a criminal investigation provide that such access is authorised by a
Revenue Commissioner.
145
146
For example, see section 31 of the Competition Act 2001 and the powers of an inspector (under s10 of the Companies Act
1990 as amended by S23 of the Company Law Enforcement Act 2001) appointed by the Director of Corporate Enforcement
under section 14 of the said 1990 Act as amended by section 26 of the said 2001 Act.
This was clarified in 1999 by the Supreme Court (Barrington J) in the matter of National Irish Bank Ltd and the Companies Act
1990.
72

(62) Revenue investigators should be permitted to question persons detained in Garda
custody in connection with an arrestable revenue offence.
(63) A power for Revenue to access telephone records in criminal investigations subject to
authorisation by a Revenue Commissioner.
(64) The Group does not recommend granting to Revenue the powers of search and
production available under recent criminal justice legislation but would encourage further
studies to be undertaken in relation thereto by the Law Reform Commission or
otherwise147 independently from the urgency attaching to the annual Finance Act.
147
Certainly there should be consultation with the policy area of the Department of Justice Equality and Law Reform which has
been involved in preparation of legislation regarding Garda powers.
73
CHAPTER 5
Appeals and Reviews of Revenue Powers
1. Existing Review and Appeal Mechanisms

1.1. The Groups terms of reference asked that it advise on the appropriate appeal or review
mechanisms that should be applied in the exercise of Revenue powers.
1.2. There are three types of appeal currently available those involving administrative reviews
within Revenue, those where the Ombudsman is asked to intervene and those that involve a
formal appeal to the Appeal Commissioners. In addition there is the option of seeking a judicial
review of the decision making process used by the Revenue Commissioners.
2. Other Relevant Examinations

2.1. The Group noted that the Department of Finances Steering Group on the Review of the
Office of the Revenue Commissioners examined the tax appeals system and made certain
recommendations. The Group also noted that the Public Accounts sub-Committees proposals
which largely concerned the Appeal Commissioners and the statutory basis for their office. In
addition, the recent Law Reform Commission Consultation Paper on a Fiscal Prosecutor and
Revenue Court has made a number of detailed recommendations in regard to the appeal process
including about the listing of cases for the Appeal Commissioners (recommendation 8.14) and
the issuing of precepts to assist witnesses (recommendation 8.21).
3. International Approach
3.1. Ireland, by and large, has opted to steer appeals on the matters of fact and of law of a tax
case through the Appeal Commissioners and onto the courts system. The administrative appeal
routes include an internal administrative appeal (since 1999 this offers the option of having an
external reviewer also examine the case) and the Ombudsman. The other jurisdictions (see Table
following) do likewise: administrative reviews, the Ombudsman option, tribunals and the courts
all feature in many of these systems.
3.2. It is notable that in Australia and New Zealand the respective Ombudsman establishments
have introduced dedicated sections for tax complaints, whilst the UK has opted for an Adjudicator
operating under broadly similar rules to an Ombudsman and the UK taxpayer may also go to
the Parliamentary Ombudsman with a case that has been dealt with by the Adjudicator. Replies
from other jurisdictions indicate that an appeal on powers is generally to a court with a limited
exception for certain powers in the UK.
75
Spectrum of dispute areas for tax and tax administration appeals machinery in certain
common law country comparators
Spectrum of
Appeal Issues
Administrative
Decisions or
Conduct
Ireland
United Kingdom
Australia
Canada
Administrative
Review (internal)
Administrative
Reviews
Administrative
Reviews
Administrative
Reviews
Administrative
Review (external)
Adjudicators
Office
Special Tax
Advisor to the
Commonwealth
Ombudsman
Revenue Canada
Appeals Branch
Ombudsman
Parliamentary
Ombudsman
General
Commissioners
Appeal
Commissioners
New Zealand
Administrative
Reviews
Provincial
Chief
Ombudsman may Ombudsman
investigate cases
involving
provincial taxes148
Small Taxation
Claims Tribunal
Special
Commissioners
Tax Court of
Canada
(informal
procedure)
Tax Court of
Canada
(general
procedure)
Taxation Review
Authority (small
claims
jurisdiction)
Taxation Review
Authority
(general
jurisdiction)
VAT/Duties
Tribunal
Points of Law
Courts
Courts
Courts
Courts
Courts
3.4. It was also noted that the general norm in Ireland and other jurisdictions would for existing
internal appeal mechanisms to be exhausted before cases progressed to an external tribunal of
appeal or Ombudsman.
4. Administrative Review
Internal Administrative Reviews
4.1. The right to an internal administrative review is contained in Revenues Charter of Rights
which provides that a taxpayer can object to a charge or duty if s/he thinks the law has been
applied incorrectly and can ask to have the case reviewed. The procedures in relation to review
on taxation issues are outlined in a published Statement of Practice.149
4.2. The Charter points out that the administrative review is in addition to a taxpayers legal
rights to an independent review, such as an appeal to the Appeal Commissioners. As well as
taxation matters, the administrative review procedures are open to any individual who wishes to
object to any decision relating to granting approval for a premises for VRT dealer authorisation
148
149
There is no Federal Ombudsman in Canada.

Statement of Practice SP/GEN-2/99 Revenue Internal Review Procedures: Audit and Use of Powers.
76
and a range of other issues such as classifications or valuations under the EU Customs Code.
There is a purely internal review and also a review with the involvement of an External Reviewer.
4.3. A taxpayer must make a written request for an administrative review. The reviews are
relatively informal investigations that examine the official documents and files to ensure that
decisions taken were fair, based on the available information and the correct administrative
procedures. The taxpayer does not have a right to be present or to have representation during
this process. There is no formal time limit on completing a review but the unit aims to have a four
to six week turnaround for cases. The Director of Customer Services is assisted in all administrative
reviews by an Inspector of Taxes, part of whose duties relate to the administration of the review
process (e.g. summarizing the issues involved, preparing the case notes and files etc.). The
reviewer is generally an official who had no previous involvement in the case and at a more senior
level than the staff member who made the initial decision.
External Administrative Reviews
4.4. In the past, some tax practitioners and business representative groups indicated that there
could be a reluctance to seek a review, particularly in relation to audit or use of powers, because
the taxpayer might consider the reviewer as being too closely involved with the official who
carried out the audit or made the decision in question; or it might be thought that the request for
a review would give offence to the official involved and have an adverse affect on the taxpayers
future relations with Revenue.
4.5. A Revenue quality customer service initiative to help deal with these concerns led
(particularly in light of powers granted in 1999) to the establishment of a panel of three external
part-time reviewers for cases other than those involving customs and excise duties. The
involvement of external reviewers commenced in September 1999.
4.6. In making a request for an administrative review, a taxpayer can now nominate a class of
person to carry out the review from among the following:
a senior colleague of the auditor;
the Director of Customer Service, (who has no operational or management function

in relation to audits);
the Director of Customer Service jointly with an External Reviewer.
4.7. The formal administrative review (as opposed to a local review by a more senior officer or
the District Manager) generally begins with a complaint being made to the Director of Customer
Services and the complainant indicating whether they wish to seek an internal or external review.
An external review involves one of the panel of three External Reviewers, usually selected in
rotation, as well as the Director of Customer Service. The Group clarified that the External
Reviewers do not sit together as a panel but are each assigned individual cases as they arise. The
reviewer receives the taxpayers complaint, the taxpayers file, the District Inspectors notes and a
factual summary of the case, usually written by the Inspector of Taxes in the Customer Service
Unit. The External Reviewer reads all this material and comes to a view, which they then discuss
with the Director of Customer Service, who has rarely, if ever, disagreed, although views may be
tempered by this discussion. The discussion between the External Reviewer and the Director of
Customer Service used to be by telephone but, in line with a recommendation contained in a
77
2002 review of the External Review process conducted by a former senior civil servant, the
External Reviewer now meets the Director of Customer Service in person.
4.8. The External Reviewer will then, together with the Director of Customer Services, agree the
text of the letter to issue in reply to the taxpayer. This letter, informing the complainant of the
outcome of their review, will usually be signed by the Inspector of Taxes in the Customer Service
unit.
4.9. The table below shows the breakdown of cases for Internal and External reviewers 1999
2001.
Revenue Internal and External Reviews 1999-2002
Year
Number
Received
Number
Finalised
Inspectors
decision Upheld
Inspectors
decision
Revised/
Partially Revised
Withdrawn or
agreed prior to
being sent to
Reviewers
6
9
6
9
6
6
0
0
Total
15
15
12
2000 Internal
External
25
38
25
38
12
26
10
8
3
4
Total
63
63
38
18
2001 Internal
External
18
22
16
22
8
15
7
7
1
0
Total
40
38
23
14
2002 Internal
External
14
25
10
22
9
14
1
4
0
4
Total
39
32
23
1999 Internal
External
Source: Office of the Revenue Commissioners
Experience of External Reviewers

4.10. The main points and considerations arising from the Groups consultations with the
External reviewers were:
There are not a significant number of complaints or appeals being made to the External
Reviewers relating to Revenue powers, and issues regarding use of the 1999 Powers
have rarely come before them. While there were few cases brought to their attention
involving questionable conduct by the Revenue auditor, complainants often
underlined that they had no difficulty with the auditor.
The External Reviewers felt they had no difficulty in getting the flavour of a case from
the written records and did not feel they needed to see the taxpayer or inspector in
person if they met with the Inspector then they would also need to meet with the
taxpayer. This would mean that representation would be involved and the system
would become more costly, formal and quasi-judicial.
78
They saw it as their role to see that procedures were fair. They outlined that their
recommendations may not always treat of the tax alone for example they could
recommend that the taxpayer should employ an accountant. It was added that on
occasion they had recommended that the Inspector and the taxpayer should revisit
the case and consider some other ways forward and that this could be considered a
form of mediation.
4.11. The Group noted that the Reviewers examine cases involving areas which are wider in
scope than their stated role of dealing with requests for reviews where a person considers that
a Revenue officer has abused his or her position in the use of those powers.150 The Group
considered that the role of the External Review functions is not well understood and needs to be
better publicised.
5. Appeal Commissioners
5.1. The Appeal Commissioners constitute a tribunal, which is given the following definition by
Hogan and Morgan (1998) in Administrative Law in Ireland:
a body, independent of the Government or any other entity but at the same time not a
court, which takes decisions affecting individual rights, according to some fairly precise (and
usually legal) guidelines and by following regular and fairly formal procedure.151
5.2. To this definition may be added some general features of tribunals as follows:
They make awards rather than give judgements (i.e. they are an independent part of
the Executive and not part of the Judiciary)152.
They are relatively informal in conducting business (compared to Courts).
They usually act more speedily than a Court; in theory they give decisions on the
spot.
They do not usually charge substantial fees or allocate costs.
They are not usually bound by precedent.
Members of tribunals are frequently specialists in the subject area.
5.3. An appellant makes his/her appeal to the Appeal Commissioners through the Inspector of
Taxes, who decides whether or not grounds for such an appeal to the Appeal Commissioners
exist. If it is considered that no grounds exist the Inspector of Taxes may advise the appellant of
this and the appellant has the option to appeal this decision (i.e. the decision that no grounds exist)
to the Appeal Commissioners. The Inspector will communicate with the Appeal Commissioners,
concerning a date for the hearing etc., and acts as a conduit between the Appeal Commissioners
and the appellant taxpayer. The Tax Inspector notifies the taxpayer and his/her agent at least 21
days in advance. Many appeals are settled in the 21-day interval between the notice and the date
of the appeal hearing.
150
151
152
Paragraph 3.4, SP/GEN/2/99

Hogan and Morgan, Administrative Law in Ireland 3rd Ed. (1998), pp. 256-7
Dail Eireann, Vol. 376, Col. 435, 2 December 1987. Intervention from Deputy ODea: Mr. Justice Barron concluded that the
functions of the Appeal Commissioners, as set out in the Income Tax Act, 1967, were not judicial functions but were merely
administrative functions.
79
5.4. The two Appeal Commissioners do not normally sit together but rather hear appeals
individually. A taxpayer may represent her/himself at an appeal hearing or may choose to be
represented by a barrister, solicitor, accountant, member of The Institute of Taxation or any other
person the Appeal Commissioners may permit. Hearings are relatively informal within the
parameters of fair procedure and the proceedings are confidential. Witnesses may be called by
either side. The burden of proof is on the taxpayer to dislodge the assessment raised by the
Inspector by obtaining a determination.
5.5. The Appeal Commissioners decisions are final and conclusive and they adjudicate on an
assessment in respect of the quantum of tax alone (they cannot deal with either penalties or
interest).
5.6. The decision of the Appeal Commissioners may be appealed by the losing party to the
higher courts on points of law.153 This is known as a case stated as the losing party before the
Appeal Commissioners must prepare and state a case on the relevant legal point for the higher
court to hear. An appellant may also seek to have his/her case reheard by a Circuit Court Judge.
Revenue may do this (i.e. have the case reheard) only in respect of Capital Acquisitions Tax cases.
A small number of appeals, about 10 to 15 a year, proceed from the Appeal Commissioners to
the Circuit Court.154
5.7. The Appeal Commissioners possess considerable advantages over other external bodies.155
Proceedings before them are relatively inexpensive and based on existing work loads are
reasonably expeditious as well as being informal and confidential. The Appeal Commissioners
have a specialised knowledge of the Taxes Acts. Practitioners and taxpayers see a considerable
advantage in the fact that hearings are held in private. The Appeal Commissioners cannot currently
adjudicate on either penalties or interest, nor can they determine costs, i.e. each side bears its
own costs.
Issues concerning the Appeal Commissioners
5.8. The Appeal Commissioners have been a long-standing feature of the tax system in Ireland
and have stood the test of time. Under current provisions the Appeal Commissioners have some
additional functions to the main role in regard to the determination of appeals against tax
assessments. They act as custodian of the right of Revenue to access to certain specialised powers
the authorisation of an Appeal Commissioner is required for an authorised officer to issue a
notice to a financial institution under Section 907; where an officer seeks to reopen a 1993
Amnesty case it is necessary to get Appeal Commissioner approval. In this role the Appeal
Commissioners review the facts on foot of which it is intended to exercise the particular powers
and determine whether in the particular circumstances the Revenue Commissioners would be
justified in so doing. The fact that the Appeal Commissioners have no role in determining appeals
in regard to interest, penalties and voluntary disclosure which are an established part of the day
to day experience of taxpayers in regard to the making of an audit/investigation settlement and
are the subject of Revenue Codes of Practice was seen as a drawback by the Group.
153
154
155
It may be noted that in cases with substantial issues or amounts of tax in question, the Appeal Commissioners hearing is frequently
a staging post as the losing party before them will frequently utilize the option of a rehearing by the Circuit Court (if such is
available to them) and/or an appeal to the High Court (and perhaps onwards to the Supreme Court) on a point of law.
Source Law Reform Commission Consultation Paper, June 2003.
For an in-depth description and discussion of the Appeal Commissioners, see the Law Reform Commissions June 2003 Consultation
Paper on a Fiscal Prosecutor and a Revenue Court.
80
6. The Ombudsman
6.1. The Ombudsman is statutorily independent in the performance of her functions and can
investigate administrative actions by a wide range of state agencies where a complaint has been
made to her (or on her own initiative) and report thereon to the parties concerned.
6.2. Before the Ombudsman makes a finding or criticism adverse to any person or body in a
report or recommendation she must afford that person or body concerned an opportunity to
consider the matter and make representations on the matter. The Ombudsmans Office has
indicated its willingness to investigate an issue if it seems to them that existing appeals machinery
is being frustrated.
6.3. Excluded from examination or investigation by the Ombudsman are cases:
where the matter is before the Courts;
where the aggrieved person has a statutory right of appeal to the courts;
where there is a right of appeal to an independent appeal body;
related to recruitment or terms or conditions of employment;
relating to aliens or naturalisation;
relating to pardon or to remission of prison sentences or other court penalties;
relating to the administration of prisons.
6.4. The Ombudsman has sought to have the decisions of the Appeal Commissioners made
subject to consideration by the Ombudsman.156 The Ombudsman investigates Revenue cases
regularly and the table below outlines the number of cases and their outcomes over the past five
years.
Complaints made to the Ombudsman about Revenue
Number of Complaints
Outcome
1998
1999
2000
2001
2002
Not upheld
55
33
18
66
36
Withdrawn
12
Discontinued
44
25
13
22
Assistance provided to complainant
30
39
27
54
Partially resolved
Resolved
22
18
10
14
139
122
84
102
128
Total
Source: Office of the Revenue Commissioners Annual Reports
156
The Schedule to the Ombudsman Act 1980 at Part I lists Departments of State and other persons subject to investigation and
includes the Revenue Commissioners. However Part II of the Schedule states the following: The reference in Part I of this Schedule
to the Revenue Commissioners does not include a reference to the Appeal Commissioners of Income Tax or their staff.
81
7. Judicial Review157
7.1. Decisions of the Revenue Commissioners are also open to judicial review. This is a legal
remedy available where a body or tribunal with legal authority to determine rights or impose
liabilities, and with a duty to act judicially, has acted in excess of legal authority or contrary to its
duty.
7.2. Strictly speaking, Judicial review is not an appeal. It is the procedure by which the High
Court exercises a supervisory role over lower courts, administrative bodies and individuals and is
confined to matters of public law. Judicial review is a relatively expensive process and accordingly
may not be the most efficacious way for a taxpayer to rectify an error of law.
8. Conclusions and Recommendations

8.1. The Group believes that the exercise by Revenue of their powers ought to be subject to
external appeal procedures and that the Appeal Commissioners represent the most appropriate
appeal mechanism.
8.2. The Group considered there were two areas within which an appeal should be provided.
The first of these relates to the Groups recommendations concerning reform of the statutory
interest and penalty regime and the making of further statutory provision for voluntary disclosure.
It is an essential component of the Groups recommendations in these areas that there be an
appeal route to the Appeal Commissioners.
8.3. The second area is that of disagreements during audits; for example, where an audit remains
open for a considerable period of time (and a surprising number remain live for over twelve
months158). This can be a very stressful situation for a taxpayer who wishes to have closure on the
examination of his/her affairs or that of their company by Revenue. In addition, any unnecessary
prolonging of an audit can involve the taxpayer in considerable and unwarranted expense.
Another area of potential disagreement, as referred to in Chapter 3, is when the Revenue auditor
requests certain books and records that the taxpayer does not feel are relevant to the audit. In
addition the inappropriate removal of books and records and equipment can prove to be very
disruptive for a business. The Group believes that the availability of an easily accessible
arbitration mechanism on these issues would enable audits which get bogged down over such
issues to be progressed to conclusion. The availability of such a facility would do much to alleviate
a source of considerable frustration to taxpayers and their agents.
8.4. To deal with this second category the Group envisages the Appeal Commissioners holding
regular short hearings based on oral evidence to decide summarily matters of fact the Monday
morning session. Obviously the rationale for such a procedure would require that cases could be
turned around quickly, certainly no longer than within the current 21 day period; that both sides
would enter into the process in good faith and agree to abide by it and the determination reached
would be accepted as full and final.
8.5. There would have to be an examination of the feasibility of ensuring such a level of service
under the current resource levels for the Appeal Commissioners. To guard against the abuse of
157
158
This is a common review route regarding Garda powers.

In 2002 there were 2,112 audits open for more than twelve months.
82
the procedure to stall a Revenue audit/investigation, it would be a precondition for access to such
an arbitration mechanism would be that the taxpayer should pay in advance a sum in respect
of the estimated tax liability which is not in dispute.159 Although the Group accepts that it would
be a novel jurisdiction for the Appeal Commissioners they consider that such an arbitration
function could be viewed as a determination of facts in a restricted range of situations.
8.6. In general the Group considered that the various appeal procedures available to taxpayers
need greater publicity. They are not always well understood, even by professional tax advisors.

(65) The jurisdiction of the Appeal Commissioners should be extended in the light of the
statutory amendments proposed to include appeals regarding:
the categorisation of penalties;
the application of interest rates in certain defined situations, and
the facts defining a voluntary disclosure.
(66) In addition the Appeal Commissioners should be empowered to adjudicate in a Monday

morning type session:
whether Revenue have a right in law to seek particular information;
breach of proposed statutory time limits on audit and/or a request to stay an audit;
and
unreasonable disruption to business from the removal of current records and

equipment.
159
these arrangements being practicable in terms of resources available to the Appeal

Commissioners; and
the taxpayer being required in all cases to pay the tax which is not in dispute.
Section 9 of FA 1983 provided for a similar safeguard against abuse of the Appeal Commissioner process, i.e. a late application
for appeal was not admissible unless the appellant paid the tax charged in the assessment (together with interest) and provided
all relevant information.
83

Administrative Reviews
(67) Revenue should continue to have an internal review function which would deal with
issues about the exercise of Revenues powers and believes that the related
recommendations about Powers officers in each region should assist these internal
reviews in dealing with complaints concerning the use of Revenue powers.
(68) The Group also believes that the External Reviewers should continue the role of quality
assurance on the internal customer service function effectively Revenue conduct issues
but recommends that they should have a profile more visibly independent of the
Revenue Commissioners and that their role should be better publicised.
84
CHAPTER 6
Comparable Powers in Certain other Jurisdictions and

other Regulatory Authorities
1. Powers in other Jurisdictions

1.1. The Organisation for Economic Cooperation and Developments (OECD) 1990 Report on
Taxpayers Rights and Obligations is the most recent international study of comparable powers in
other jurisdictions. It gives a comprehensive overview of the powers of revenue authorities in 21
jurisdictions world wide (see Tables in Appendix H). Proceeding from this base, a questionnaire
was drawn up to establish the position in other jurisdictions on matters of particular concern to
the Group.
1.2. The jurisdictions and the tax administrations chosen for comparison were as follows:
Jurisdiction
Tax Administration
Australia
Australian Tax Office (ATO)
Canada
Canadian Customs and Revenue Agency (CCRA)
Ireland
Office of the Revenue Commissioners
The Netherlands
Belastingdeinst
New Zealand
Inland Revenue Department (IRD)
Sweden
Riksskatteverket (STA)
United Kingdom
(i) Customs and Excise (C&E)
United States of America
(ii) Inland Revenue (IR)

Internal Revenue Service (IRS)
Issues for Comparative Analysis

1.3. The Group wanted to identify two broad comparators:
The general characteristics of the tax administrations which were broadly comparable
to Ireland, e.g. in terms of the type of tax assessment system used, obligations on
taxpayers and penalties for failure for non-filing, and non-compliance, level of access
to records and discourse with tax practitioners.
Particular approaches to the use of powers in terms of preconditions and limitations

on use of discretionary powers. The need for court orders to enter dwellings, the
conditions and consequences surrounding voluntary disclosure as well as the
mitigation of penalties were included.
85
1.4. The questionnaire and its responses of necessity were broad brush and there is an
inevitable element of subjectivity involved. The questionnaire covered:
Type of Tax Administration;
Obligations to file returns;
Information Powers;
Audits and investigations of tax liabilities;
Penalties and Interest: Power to mitigate or compromise;
Voluntary Disclosure;
Prosecution of tax offences; and
Other matters.
1.5. The legislative position was identified in regard to some of the powers but not all so the
replies cover both administrative practice and legal provisions. The conclusions drawn are set out
hereunder. As already mentioned, given the diverse and distinctive legislative frameworks of each
jurisdiction and taxation authority as well as the subjective nature of the responses, these
conclusions should be treated with caution without further reference to specific national
legislation.
1.6. The chart below sets out the type of administration in each of the jurisdictions:
Country (Tax Administration)
AUS
Self Assessment for all taxpayers
CAN
IRE
Self Assessment for Business taxpayers
NETH
Direct Assessment; Self Assessment for Business taxpayers
NZ
SWE
UK (C&E)
Direct Assessment; Self Assessment for Business taxpayers
UK (IR)
Self Assessment for Business taxpayers
USA
1.7. Most of the jurisdictions issued codes of practice following consultations with practitioners.
The exceptions were the UK Inland Revenue, which issues a code of practice but does not consult
with practitioners, and the Netherlands which has no code of practice.
86
Obligation to File Returns

1.8. There is a penalty for failure to file returns in most of the jurisdictions and most selfassessment jurisdictions require a return to be filed without notice, as in Ireland. Generally further
information not required on the return can be obtained by the tax administration following notice
to the taxpayer. The Netherlands, which has self-assessment for business taxpayers, requires the
business taxpayer to be notified before an obligation to file a return arises.
1.9. The consequences of not filing or late-filing vary: Australia, Sweden, the Netherlands, USA,
New Zealand, UK (C&E) and UK (IR) have limited sanctions such as interest, penalties or
administrative fine for not filing. Countries such as the Netherlands, New Zealand and the United
States have, in addition, court sanctions such as fines and imprisonment160 similar to Ireland.
1.10. In all countries it is where there is a deliberate fraud involved that the more serious
sanctions such as court fines or imprisonment arise. The information provided indicated that
ceiling on penalties imposable for negligence generally ranged between 100% and 150% of the
unpaid tax liability with a few in the 150% 200% range.
2. Information Powers
Access to First Party Information
2.1. All tax authorities surveyed have the power to require production of books and records
from a taxpayer; uniquely, in the UK a court order is necessary to enforce this power. All other
jurisdictions, save Canada, have simply to provide the taxpayer with notice.
2.2. Tax authorities could access the following records, with certain exceptions and subject to
the restrictions as set out below. It is noteworthy that uniquely Ireland does not have access to
records of resident controlled foreign entities
160
Relating to a tax liability;
Personal credit card accounts;
Personal bank account;
Records of related persons;
Records of a business;
Records relating to resident controlled foreign entities; and
Details of property including non-business assets.
Although they stated that such sanctions are rare.
87
Country
(Tax Administration)
Summary of Restrictions on access to books and records
AUS
Must be for a valid purpose of the relevant tax act.
CAN
None stated.
IRE
Personal credit card and bank account information can be accessed only where there is a
link to business transactions. Cannot access records relating to resident controlled foreign
entities.
NETH
None stated.
NZ
None stated.
SWE
Cannot access the records of a related person.
UK (C&E)
Personal credit card and bank account information, records of related persons and details
of property can be accessed only in a criminal case.
UK (IR)
Need the permission of the Tax Appeals Tribunal (Special Commissioner) or a Circuit Court
judge to access any of the records.
USA
None stated.
Time Periods for retention of books and records by the taxpayer

Country (Tax
Administration)
Time period up to which a request for books

and records would usually be made
Time period which may be covered by a

request for books and records where fraud
suspected
AUS
No defined limit
No defined limit
CAN
6 years
No defined limit
IRE
4 years
No defined limit
NETH
5 years
(although have to retain for 7 years)
Not stated
NZ
4 years
No defined limit
SWE
5 years
10 years
UK (C&E)
3 years
20 years
UK (IR)
Not stated
20 years
USA
3 years
No defined limit
(6 years for non-filer/omission of income cases
unless fraud suspected)
88

2.3. The tax authorities in all jurisdictions surveyed have the capability to access information on
a taxpayers income from third parties. This includes situations where the third party is a financial
institution, save for the Australian Tax Office (ATO), who could only do this where there was a
suspicion of non-compliance. Indeed, automatic reporting from financial institutions is provided
for in all jurisdictions surveyed except the ATO and the UK Inland Revenue (UK Customs and
Excise have this power). Taxpayers are informed in advance of the intention to approach a financial
institution in Australia, Canada, the Netherlands and Ireland. They are not so informed in the
United States, Sweden, New Zealand and the UK.
2.4. No jurisdiction had a statutory provision that the taxpayer must be approached before
requesting information from a third party that is not a financial institution, although in Ireland and
the United States (IRS) the taxpayer would be requested for the information before asking the
third party for it.
Professional Privilege
2.5. All jurisdictions had provisions which protected certain privileged records, usually legal
professional privilege, statutorily defined. Only in Ireland and to a lesser extent the UK does
the privilege extend to the accountancy profession, although the Netherlands, New Zealand and
Australia have an administrative policy that no confidential correspondence between the taxpayer
and his/her accountant/consultant is sought.
3. Audit and Investigation of Tax Liabilities

3.1. Tax authorities in other jurisdictions can enter and search premises and dwellings. Again,
UK Inland Revenue are unusual in that they have no right of entry or search save with a court
order whilst all the other jurisdictions can enter business premises during working hours. without
a court order. Entry to private dwellings (whether first or third party or of related persons) typically
needed a court order except where the resident/occupier gives consent.
89
General preconditions for Entry

Preconditions:
Business
Premises
Dwellings with
Business
Private Dwellings
Third Party
Premises
Third Party
Dwellings
Consent of
taxpayer
USA
SWE
UK(ci)*
CAN161
USA
SWE
UK(ci)*
UK(C&E)
CAN
IRE
USA
NETH162
SWE
UK(ci)*
UK(C&E)
CAN
USA
UK(C&E)
USA
NETH
UK(C&E)
CAN
Revenue
Authorisation
NZ
AUS
UK(cr)*
UK(C&E)
IRE
AUS
UK(cr)*
AUS
UK(cr)*
IRE
NZ
AUS
UK(cr)*
IRE
AUS
UK(cr)*
IRE
Court order /
warrant
USA
UK(cr)*
USA
NZ
UK(cr)*
UK(C&E)
CAN
USA
NZ
NETH
UK(cr)
UK(C&E)
SWE
IRE
CAN
USA
UK(cr)*
UK(C&E)
CAN
USA
NZ
NETH
UK(cr)*
UK(C&E)
IRE
CAN
Suspected
Offence
UK(cr)*
UK(cr)*
NETH
UK(cr)*
SWE
UK(cr)*
NETH
UK(cr)*
*UK (IR) stated: ordinarily, no powers of entry, but in criminal cases and with a court order, entry possible. UK
(ci) = Inland Revenue civil cases only; UK (cr) = Inland Revenue criminal cases only.
Requirement for Court Order or Warrant to Search

Preconditions
Business
Premises
Dwellings with
Business
Private Dwellings
Third Party
Premises
Third Party
Dwelling
Court Order
UK(IR)163
USA
CAN
UK(IR)
USA
NZ
CAN
IRE
UK(IR)
USA
NETH
NZ
CAN
SWE
IRE
UK(IR)
USA
CAN
UK(IR)
USA
NETH
NZ
CAN
IRE
Warrant
UK(IR)
USA
UK(C&E)164
CAN
UK(IR)
USA
CAN
UK(C&E)
UK(IR)
USA
NETH
UK(C&E)
CAN
UK(IR)
USA
UK(C&E)
CAN
UK(IR)
USA
NETH
UK(C&E)
CAN
162
161
163
164
In contrast, business and legal persons have the obligation to admit the tax administration to any part of their business premises
for carrying out audits.
Auditors have the legal authority to enter any business premise, except a dwelling house, without a warrant and demand the
production of information from taxpayers or from third parties. Auditors need a warrant to enter a dwelling house. Investigators
cannot enter a business premise or dwelling house without a search warrant. However, taxpayers or third parties may waive the
requirement for a search warrant and provide access voluntarily.
Power of search permitted only in criminal investigations in UK Inland Revenue.
UK (C&E) need to be able to demonstrate grounds to obtain a warrant or to be able to demonstrate to a court that consent has
been given.
90
Country (Tax
Administration)
Summary of Restrictions on Entry and Search
AUS
Can enter and search any building once officer holds appropriate authorization; private
dwellings would only be accessed on very rare occasions.
CAN
Do not need consent of taxpayer to enter premises but do need consent to enter any
dwelling; need court order to search in all cases.
IRE
Need internal authorization to enter or search a premises, need court order to search any
dwelling in the absence of taxpayer consent.
NETH
Can enter any business premises but not dwellings unless the taxpayer consents. Can
search business premises but needs court order (and suspicion of an offence) to search
any dwelling in the absence of taxpayer consent.
NZ
Need authorization to enter and search business premises; need court order to enter and
search private dwellings in all cases.
SWE
Can enter and search (subject to authorization) business premises; need court order to
enter and search private dwellings unless taxpayer consents.
UK (C&E)
Need internal authorization to search business premises; need court order to search any
dwelling or third party premises unless taxpayer consents.
UK (IR)
Has no power of entry (ie cannot carry out on-site audit). Can enter and search only in
criminal cases and on foot of a court order, which of itself requires the suspicion of an
offence.
USA
Can enter business premises (location of books and records) but can only search any
building with either taxpayer consent or a court order and the latter requires showing
probability of there being evidence of a crime.
3.2. All tax administrations with the exception of the IRS in the United States and Inland Revenue
in the UK can search business premises without a warrant.
91
Seizure and retention of books and records

3.3. The questionnaire responses showed that in general the seizure of books and records is
effectively confined to cases where criminal prosecution is envisaged, as all except Sweden
explained that an offence would be suspected for this power to be invoked. Notwithstanding this,
a warrant was not necessarily required to seize documents in Ireland, the Netherlands, New
Zealand, Sweden and UK (C&E), although it would often be sought by the UK (C&E).
Country (Tax
Administration)
Restrictions on Removal of Records
AUS
Documents and records can only be seized by the police on foot of a warrant;
consequently this is only done in criminal prosecution cases.
CAN
Investigators may only seize documents pursuant to a warrant. The protocols of the
statutory criminal code apply to seized records.165
IRE
An authorized officer can seize and retain records to audit returns or to investigate
(including with a view to prosecution). An offence would be suspected for records to be
seized and there is an administrative time limit on retention of records.
NETH
Would not seize documents unless an offence was suspected, i.e. only for an authorized
officer to investigate with a view to prosecution in specific cases. Do not need court order
and there is no time limit on retention of documents.
NZ
(including with a view to prosecution). There are no pre-conditions for use but there is a
statutory time limit on retention of records.
SWE
An authorized officer can seize and retain records to audit returns or to investigate (but
not with a view to prosecution). A civil offence would be suspected and there is a statutory
time limit on retention of records. The tax authority is charged with examining not punishing
and any prosecutions would be undertaken by a prosecutor.
UK (C&E)
(including with a view to prosecution). An offence would be suspected for records to be
seized and a court order may be sought rather than relying on internal powers. No time
limit is stated.
UK (IR)
An authorized officer can seize and retain records to investigate with a view to prosecution
only. An offence would be suspected and there is an administrative time limit on retention
of records. This would only occur in criminal cases and on foot of a court order and search
warrant.
USA
An authorized officer can seize documents and records to investigate tax liabilities,
including with a view to prosecution. A warrant would be required and there is no time
limit on retention.
165
In Canada, courts draw a distinction between audit and investigation: the former is considered to have a purely civil and monetary
purpose while the latter relates to criminal law enforcement and prosecution.
92
Appeals
3.4. Most jurisdictions answered that an appeal mechanism for the use of powers was to a
court. However, in the United Kingdom a taxpayer may apply to the Tax Appeal Tribunal for an
order requiring the Inland Revenue to cease the audit. In this general context, the jurisdictions
surveyed do not require the tax administration to provide explanations about the directions of an
audit with New Zealand and Australia are exceptions on this point. In Sweden the burden of
proof in an audit is on the taxpayer for the first two years of an audit, after that the burden of
proof is on the tax administration.
Country (Tax
Administration)
Appeals on use of Powers during Audits
AUS
Taxpayer can appeal to a court on a point of law.
CAN
If a taxpayer refuses a demand issued by an auditor, the CCRA may make an application
to a court for a compliance order to force the taxpayer to comply; normal routes of
onward appeal are available.
IRE
Taxpayer can seek to have the case reviewed within the tax authority or by an external
reviewer; s/he can also appeal a case to an administrative tribunal or to court on a point
of law. Separately the taxpayer could ask the Ombudsman to review the case.
NETH
There are no legal possibilities for a taxpayer to appeal against the use of powers during
an audit.
NZ
An appeal on a point of law on a point of law or on an administrative discretion regarding

the use of powers to a court is possible.
SWE
Taxpayer can appeal to a court, e.g. whether tax advice from lawyer is privileged. The
decision to undertake the audit cannot be appealed.
UK (C&E)
Taxpayer can appeal to the tax authority or to an administrative tribunal on a point of law
or an administrative discretion (such as on the length of time spent on an audit); in some
issues the tribunal has only a supervisory and not an appellate responsibility.
UK (IR)
An appeal on a point of law on a point of law or on an administrative discretion regarding

the use of powers is possible and would be made to a court for a criminal case and to an
administrative tribunal for a civil case.
USA
Taxpayer can appeal informally to IRS management or use the formal administrative appeals
process. A taxpayer can also appeal to a court on a point of law or on an administrative
discretion.
Penalties and Interest: Power to Mitigate or Compromise

3.5. Most countries do not require penalties to be imposed by a court and most allow for
penalties to be mitigated. The exception is Sweden where penalties must be imposed by a court
and there is no power of mitigation resting with the tax administration. New Zealand, Australia,
the United Kingdom (Inland Revenue), Canada, UK (C&E), the Netherlands and the United States
all have an approach to the mitigation of penalties similar that now used in Ireland. UK (Inland
Revenue), UK (C&E), Australia, New Zealand, USA and Canada also allow the tax administration
to mitigate interest, although this would not happen routinely but, for example, would be an
option in litigation or hardship cases. All jurisdictions except Sweden stated that they provide for
an appeal166 on the level of mitigation where mitigation is permitted.
166
Either to the tax authorities or an administrative tribunal or a court.
93
Country (Tax
Administration)
Conditions governing the mitigation of

penalties
Conditions governing the compromise of

interest
AUS
Authorized officers of the ATO can mitigate

penalties in a settlement or for other
unspecified reasons. The decision can be
appealed to the tax authority, an administrative
tribunal or the courts.
Authorized officers of the ATO can

compromise interest in a negotiation or for
other unspecified reasons. Appeals are
possible to the tax authority, an
administrative tribunal or the courts.
CAN
Authorized officers of the CCRA can mitigate

penalties in hardship cases or settlements. The
decision to impose a penalty can be appealed
to the tax authority and the level of mitigation
can be appealed to a court.
Authorized officers of the CCRA can

compromise interest in hardship cases or
settlements. The decision to charge interest
can be appealed to the tax authority and the
level charged can be appealed to a court.
IRE
Agreement is generally reached with the

The Irish Revenue has no power to reduce
taxpayer and court proceedings are not
interest.
necessary to recover the penalty. The power to
mitigate penalties may be used, under
supervision, in a negotiation. The imposition of
a penalty and the level of mitigation can be
appealed to the tax authority.
NETH
The Dutch tax authority can reduce penalties.

Appeals on the imposition and level of
penalties are possible to the tax authority or to
a court.
The Dutch tax authority cannot reduce

interest.
NZ
Authorized NZ Revenue officers can mitigate

penalties in a settlement at litigation stage only
or for hardship reasons. The decision can be
appealed to the tax authority, an administrative
tribunal or the courts.
Authorized NZ Revenue officers can

compromise interest in a settlement at
litigation stage only or for hardship reasons.
The decision can be appealed to the tax
authority, an administrative tribunal or the
courts.
SWE
In Sweden the imposition of monetary penalties The Swedish tax authority cannot
is confined to courts.
compromise interest.
UK (C&E)
UK Customs and Excise can, in supervised

situations, mitigate penalties where cooperation is received or there are mitigating
circumstances. The mitigation level can be
appealed to the tax authority or to an
administrative tribunal.
UK Customs and Excise can, in supervised

situations, compromise the interest charged.
The level of interest charged can be
UK (IR)
UK Inland Revenue can, in supervised

situations, mitigate penalties during settlements
or in hardship cases. The imposition can be
administrative tribunal whilst the mitigation
level can, in addition, be appealed to a court.
UK Inland Revenue can, in supervised

situations, compromise the interest charged.
The level of interest charged can be
USA
Authorized IRS officers can mitigate penalties in

settlements. The decision to impose a penalty
and the level of mitigation can be appealed to
the tax authority or to a court.
Authorized IRS officers can compromise

interest in settlements. The decision to
charge interest and the level charged can be
appealed to the tax authority or to a court.
94
3.6. A reasonable definition of voluntary disclosure was supplied by the Dutch tax authority in
their questionnaire reply: the taxpayer submits a correct and complete tax return or provides
correct and complete information or data before s/he came to know, or reasonably should assume,
that the inspector is, or will be, cognizant of the incorrectness or incompleteness.
3.7. All jurisdictions except Sweden have a system of voluntary disclosure similar to Ireland. The
benefits of a voluntary disclosure are also similar, i.e. no criminal prosecution and lower levels of
penalties will apply.
Country (Tax
Administration)
Administrative or statutory
parameters
Conditions and consequences of voluntary disclosure
AUS
Not stated.
None stated. The disclosure may be used in subsequent

prosecution.
CAN
Both statutory and

administrative.
Taxpayer can correct inaccurate or misleading information,

disclose material not previously reported to the CCRA or
file and pay taxes owing if no return had been filed, without
fear of penalty or prosecution. Full and complete disclosure
must be provided to receive favourable tax consideration
under the voluntary disclosure policy. The disclosure may
not be used in a subsequent prosecution.
IRE
Both statutory and

administrative.
Greater level of penalty mitigation, publication of taxpayers

details will not arise nor will an investigation with a view to
prosecution be initiated.
NETH
Statutory.
No administrative fines imposed nor criminal prosecution

initiated with regard to the subject of voluntary disclosure.
NZ
Both statutory and

administrative.
If full details of tax shortfall provided, penalties may be

reduced and the taxpayers name may not be published.
The disclosure may be used in a subsequent prosecution.
SWE
Neither.
Sweden has no scheme of voluntary disclosure.
UK (C&E)
Statutory.
No exposure to penalties although interest will arise. The

disclosure may be used in subsequent prosecution.
UK (IR)
Administrative.
If the disclosure is genuinely unprompted, then reduced

penalties apply and there is safety from prosecution. The
disclosure may not be used in a subsequent prosecution.
USA
Administrative.
If IRS policy statement is met and no fraud, money

laundering or criminal activities are determined, then there
will be no criminal prosecution and no fraud penalties will
be imposed. However the disclosure may be used in a
prosecution if these conditions are not met.
95
Prosecution of Tax Offences

3.8. The table below sets out the replies in regard to transition from audit with a view to
monetary settlement to investigation with a view to prosecution.
Country (Tax
Administration)
Transition from Audit with a view to monetary settlement to Investigation

with a view to prosecution
AUS
Would require referral from audit area of office to fraud area of the office.
CAN
In Canada, Courts draw a distinction between the audit and investigative functions. Courts
view the audit function as having a civil or purely monetary focus while the purpose of the
investigative function is viewed as relating to criminal law enforcement and prosecution. A
referral to investigate for suspected fraud is made in cases where significant adjustments
have been identified or where the circumstances disclose evidence indicative of tax fraud.
The referral is not usually made until the audit is complete or substantially complete. Audits
are conducted in the same fashion regardless of the presence or absence of suspected
fraud.
IRE
The auditor will normally discuss the case with the Audit Manager and liaise with
Investigations and Prosecution Division (IPD) before, with the District Inspectors
permission, submitting the case for consideration by the Admissions Committee of IPD. If
the case is considered by that Committee to be suitable for prosecution, the audit is
suspended and an investigation is commenced by IPD.
NETH
Investigations with a view to prosecution are carried out by a specific branch of the Tax
Administration, the FIOD-ECD (fraud investigation department). Cases are forwarded when
there is a suspicion of a criminal fiscal offence where the tax involved exceeds \5,500
(private persons) or \11,500 (business). These limits are administratively agreed between
the Director General of the Tax Administration and the Director of Public Prosecution.
Once the tax auditor discovers such an offence, the audit is halted and the case transferred
to the FIOD-ECD who, after conferring both with the tax administration and the Public
Prosecutors office, start the criminal investigation. In cases where the amount of tax
involved is not definite enough the tax auditor has to trend carefully when asking questions
because s/he already has suspicion of a criminal offence. Misuse of his/her powers in this
stage may have effects on the criminal prosecution.
NZ
The two are not handled separately unless the matter is referred to the Serious Fraud Office
for investigation, for example where the fraud involves over NZ$500,000; or it has been
perpetrated by complex means; or is it likely to be of major public interest or concern.
SWE
When the tax authorities suspect a tax fraud (for example during an audit) they have an
obligation to report it to the prosecutor.
UK (C&E)
Where assurance officers identify a case of suspected VAT fraud they will consider the case
against guidance, which details the criteria for referral. If the referral criteria are met then a
documented referral is made to Investigation. Investigation will make a decision within 14
days whether or not the case will be taken on. If the case is taken on then it may be
investigated with a view to criminal prosecution or with a view to the imposition of a civil
evasion penalty.
UK (IR)
Decision making is at a group level within Special Compliance Office, which carries out all
investigations in which serious fraud is suspected. Such cases may be dealt with by either
the civil or criminal groups within SCO. A clear audit trail of decisions is kept, which details
the reason why a case is to be transferred from civil to criminal or vice versa.
USA
Through evidence indicating fraud or criminal activity. Once fraud is alleged, the burden of
proof shifts to the government.
96
3.9. Most countries change tack when proceeding to prosecute for tax fraud and many have
criteria for triggering this change, effectively treating prosecutions as a separate function with
different powers. The jurisdictions with larger tax administrations have the clearest distinctions.
This may result from the fact that prosecution of tax offences is dealt with by a separate part of
the tax administration. In the United States prosecutions are dealt with by the Criminal
investigation Division of the Internal Revenue Service while in the Netherlands prosecutions are
dealt with by the FIOD-ECD (Fraud Investigation Department) of the Belastingdeinst. In the smaller
jurisdictions such as New Zealand and Ireland, there are insufficient resources to allow
prosecutions to be a completely separate function.
3.10. In relation to the specific powers for prosecution, only the Netherlands and UK(C&E) have
given the tax administration a power to arrest suspects. In most countries, as in Ireland, those
who obstruct Revenue officials may be arrested by the police authorities. No notice is given of
the change from a civil to a criminal investigation in most countries. A mix of responses was given
to the question as to whether the same powers were used to investigate tax offences as other
offences of fraud.
Other Sanctions
3.11. There is no common approach. Jurisdictions such as the Netherlands and Australia have
no other sanctions other than additional tax, interest and penalties and criminal sanctions where
appropriate. Sweden and New Zealand have penalties such as trade bans and publication. In
Canada, prosecutions may be published in local and national newspapers but specific information
regarding tax defaulters is not made available using such methods.
3.12. For criminal prosecution cases, the UK Inland Revenue issues a news release and details
are published on the authoritys website. The UK (C&E) can and do report, to the Department of
Trade and Industry, directors who have been involved in fraud these are considered for
disqualification from holding directorships and UK (C&E) will similarly report accountants and
solicitors to their professional bodies if they have been involved in fraud. The Netherlands167
provides that the measure the tax administration can take when taxpayers do not comply with
the obligations pertaining to their own taxes is what the authorities call the shift in the burden of
proof. This means that the tax inspector may impose an estimated assessment. The taxpayer then
has to prove conclusively (heaviest burden of proof) that the assessment is incorrect.
3.13. The response from the United States was that, in the main, other sanctions available in
respect of incorrect returns are directed at tax advisers. Tax advisers can be barred from submitting
returns to the Internal Revenue Service and, if convicted of tax fraud, lawyers and accountants
lose their licence to practice. The approach taken by the Internal Revenue Service is that tax
advisers must have a licence to submit returns and must pass as examination to obtain this licence.
167
Netherlands has self assessment for business taxpayers and direct assessment otherwise.
97
4. Comparable Powers in Regulatory Authorities

Regulatory Authorities
4.1. The individual agencies that completed a questionnaire outlining comparable powers are
as follows:
The Criminal Assets Bureau (CAB)168
The Competition Authority
Companies Registration Office (CRO)169
Department of Social and Family Affairs (Dept of SFA)
An Garda Sochana (Garda Bureau of Fraud Investigation)
Irish Financial Services Regulatory Authority (IFSRA)
Office of the Director and Corporate Enforcement (ODCE)
Issues for analysis

4.2. The Group attempted to identify the general powers of these agencies in order to make
comparisons with Revenue powers. The main headings on which information was sought from
the agencies were as follows:
168
169
Power to require information from third parties
Power to require production of records and information
Power to Investigate a view to prosecution
Power to mitigate
Levels of fines and penalties
Power of entry and search
Power to seize documents
Appeal Mechanisms
Power of arrest and detention
Power to summon witness
Other measures
CAB officers are formally appointed from among the ranks of an Garda Sochana, the Revenue Commissioners and the Department
of Social and Family Affairs. These officers serve in the Bureau on secondment from their parent organizations. These powers and
duties of these Bureau officers are vested in them by their parent organizations.
Provides a complementary role to the ODCE in the area of company law enforcement.
98

Agency
Type of Investigations undertaken by agency
CAB
Criminal investigation of an offence by an individual;

Law Enforcement.
Competition Authority
Criminal investigation of an offence by an undertaking;

Law Enforcement;
Civil investigation of compliance with Regulations by an individual or company;
Civil investigation of a general issue of compliance by a class of person.
CRO
Law Enforcement.
Dept of SFA
Civil investigation of compliance with Regulations by an individual;

Civil investigation of a general issue of compliance by a class of person.
Investigation of a criminal offence.
Garda Bureau of Fraud Criminal investigation of an offence by an individual;

Investigation
Law Enforcement.
IFSRA
Criminal investigation of an offence by an an undertaking or an individual;

Civil investigation of compliance with Regulations by an undertaking or an individual.
ODCE
Criminal investigation of an offence by an individual;

Law Enforcement.
Power to Require Information from Third Parties

4.3. All the surveyed Agencies except for CRO can obtain information on the accountable
person or the claimants compliance status from third parties, including professional advisors and
financial institutions.170 The accountable person is not generally informed in advance. Revenue
likewise can obtain information on the taxpayers sources of income from third parties, including
financial institutions.171
Power to Require Production of Records and Information
4.4. All the Agencies, except CRO, have the power to require production of records and
information. Non-compliance is a criminal offence.
4.5. The agencies, in general, can access a wide range of records, subject to the restrictions set
our in the table below, including:
170
171
172
All records relating to compliance status;
Personal documentation;
Documentation of related persons;
All documents of a business;
Telephone subscriber and billing information.172
There is no provision for automatic reporting by financial institutions.

For instance, financial institutions are now obliged to report to Revenue under revised money laundering provisions.
CAB; Competition Authority; Gardai; ODCE.
99
Agency
Restriction on access to records and information
CAB
Access to all records listed above, including, telephone subscriber and billing information,
subject to warrant. A court order is required for accessing third party records and it is not
necessary that that the information is requested from the accountable person in advance.
Records are protected by legal professional privilege.
Access to all records listed above, including, telephone subscriber and billing information,
subject to ten days notice to accountable person. No preconditions apply to requesting
records from third parties and notice is not necessary. Records are protected by legal
professional privilege.173
CRO
CRO has no powers to require production of records and information by companies except
such information as is required by law to be placed by the company on the public register.
Dept of SFA
Inspectors can request production of wage records with no notice although generally
notice is given. Access is restricted to records relating to compliance status and all records
of a business. The accountable person must be given notice when information is requested
from a third party.
Garda Bureau of Fraud Garda powers are invoked in criminal investigations. Access is restricted to records relating
Investigation
to the offence under investigation which may include telephone subscriber and billing
information. A court order is necessary to request the records and information from an
accountable person or from a third party. It is not a requirement that the information is
requested from the accountable person before requesting it from the third party. Records
are protected by legal professional privilege.
IFSRA
Access to all of the records listed above with the exception of telephone subscriber and
billing information. No preconditions apply to access. No preconditions apply to requesting
records from a third party. Records are protected by legal professional privilege.
ODCE
Access to all records listed above, including telephone subscriber and billing information,
subject in some instances to a court order. The power is invoked in the audit of a person,
in criminal investigation and in civil investigation of a general issue subject to a court order.
The accountable person must be given notice when information is requested from a third
party and a court order is necessary. Records are protected by legal professional privilege.
A request can go back 6 years.
173
Disputes as to what is covered by legal professional privilege have to date been arbitrated by a senior legal advisor in the
Competition Authority who is a barrister or solicitor.
100
Agency
Transition from audit to establish compliance to an investigation
CAB
CAB does not carry out compliance audits. Investigation is triggered by the suspicion of
assets derived from criminal activity.
Investigations carried out by the Competition Authority begin as criminal and become civil
where there is insufficient evidence found to sustain the criminal burden of proof. The
Competition Authority can pursue a civil action in the High Court to remedy breaches of
section 4174 and section 5 of the Act. There is no provision for a fine or sanction of any
sort. Regarding summary versus indictable offences, the Authority has the power to bring
its own proceedings in relation to summary offences.
CRO
CRO imposes penalties on the basis that an annual return is being filed late; therefore no
audit is involved. Where the return remains unfiled, the offence is on record and
accordingly no investigation is required before CRO initiates criminal prosecution for non
filing. A summons for non filing of an annual return must be applied for by the CRO within
three years of the failure to file. If not, the summons will be out of time and consequently
invalid.
Dept of SFA
Cases following investigations, which are recommended by the investigating officer of the
Department of Social Family & Affairs to be prosecuted, are sent to the Departments central
prosecutions section where a decision to prosecute is made based on available evidence.
Garda Bureau of Fraud N/A

Investigation
IFSRA
IFSRA carry out both regular audits and random audits which can be triggered by
complaints or tip offs. Where there is a breach of regulatory requirements, the accountable
person must comply or explain. IFSRA have the power to revoke a license. From 2004, it
is intended that IFSRA can investigate and fine any regulated entity, subject to an appeal
to the Financial Services Appeal Tribunal and onwards to the High Court.
ODCE
Compliance audits are not carried out by the ODCE in respect of companies or directors.
The procedure is that following a complaint to the ODCE, an investigation of such persons
is made in respect of Company Law offences. ODCE have an administrative limit of 9
weeks on investigation. Under section 107 CLEA (to be implemented) ODCE may accept
a penalty in lieu of prosecution.

4.7. In general, most of the agencies do not treat investigation with a view to prosecution as
separate from audit/investigation of compliance status. Some of the agencies have powers which
are used exclusively in investigation with a view to prosecution. Only one of the agencies, CAB,
is permitted to require production of a wider range of records in an investigation of an offence
and also gives notice of wider scope of inquiry (but not to the person under investigation). All
Garda investigations are taken with a view to prosecution. CRO has no powers of investigation;
while the Companies Acts provide for possible prosecution on indictment for non-filing of an
annual return, that power has never been used.
4.8. The Competition Act 2002 makes provision on presumptions and the admissibility of
statements in certain documents in both criminal and civil proceedings. Section 12 permits the
court to make certain presumptions about the authorship and attribution of certain documents,
174
Cartel inquiries are dealt with in section 4 which provides that certain collusive activities are a breach of the Act. Section 6 provides
that any undertaking that does something prohibited by section 4 shall be guilty of an offence and penalties will apply.
101
even, for example, where offices or word processors are shared. It permits the court to make
assumptions about receipt of documents by third parties. Section 13 allows the court to treat as
admissible evidence any statements or assertions in such documents as to collusive actions and
agreements. As a safeguard to the defendants rights, such presumptions are rebuttable using a
balance-of-probability standard, even in a criminal case. In addition, the judge can decide to weight
any such statements admitted into evidence.
Mitigation and Penalties
4.9. Most of the agencies have the power to decide not to impose a sanction or not to select
a case for sanction. The circumstances under which such effective mitigation applies varies from
agency to agency.
Agency
Mitigation and appeal provisions
CAB
The body has power to decide not to impose a sanction or to select a case for sanction.
The imposition of monetary penalties is confined to court authorities. The Chief Bureau
Officer has power to negotiate a settlement to reduce penalties which must then be
formalised by Court order. Appeal against penalties and against mitigation level can be
made to the Court.
The imposition of monetary penalties is confined to court authorities. The agency has no
power to reduce penalties. Penalties imposed and mitigation level can be appealed to the
court.
CRO175
The late filing penalty arises when a return is filed outside a certain deadline, and the
Registrar is not formally allocated decision making power on whether to impose the penalty
or not. While the Companies Registrar has no formal power to mitigate penalties, CRO
considers written requests for waiver of late filing penalties on a case by case basis. There
is no provision for appeal to an outside body against the imposition of penalties by CRO.
Dept of SFA
The imposition of monetary penalties is confined to court authorities. The agency has no
power to reduce penalties.
Garda Bureau of Fraud The power to decide not to impose a sanction or to select a case for sanction does not
Investigation
apply to the Garda. The imposition of monetary penalties is confined to court authorities.
The agency has no power to reduce penalties. Appeal against penalties and against
mitigation level can be made to the Court.
IFSRA
The body has power to decide not to seek a sanction or to select a case for sanction. The
imposition of monetary penalties is confined to court authorities. In the future, IFSRA will
have power to reduce penalties in hardship case and negotiation in a settlement. Penalties
and mitigation level will both be appealable to an Administrative tribunal and to a court.
ODCE
ODCE has the power to decide not to impose a sanction or to select a case for sanction.
Section 109 CLEA 2001 (not yet implemented) allows ODCE to seek inter alia a penalty in
lieu of prosecution. The Director may decide not to prosecute a case where compliance
has been undertaken. The agency has no power to reduce penalties. There is no provision
for appeal against penalties.
175
At the request of its Users Group, CRO Link, CRO is currently undertaking a review as to the merits or otherwise of introducing
a more formalised appeals structure in relation to late filing penalty issues.
102
Maximum Combined Levels of Fines and Penalties

Agency
Other than deliberate fraud
Deliberate Fraud
CAB
Unlimited Confiscation
Competition
Authority176
\3,000 (summary)
\250,000 (indictment)
Statutory Limits
CRO177
\3,104.61 Statutory and administrative limit
IFSRA
\630,000 Statutory Limit

(never used)
No enforcement of criminal offence; matter

would be passed to Garda
ODCE
\1,904 (summary)
\12,697 (Indictable)
Statutory Limits
\12,697 (in most cases)

\253,947 (Fine for insider dealing on
indictment)
Statutory Limits
\4,000,000 or 10% of turnover whichever is

greater
Statutory Limits
4.10. Court intervention is necessary to recover penalties in the case of Dept of Social and
Family Affairs and the Competition Authority.
4.11. Two of the agencies, Dept of Social and Family Affairs and CRO have no power of search.
Of the seven agencies, only IFSRA has the power to search business premises, dwellings with
business and third party premises without warrant. (IFSRA needs a warrant for private dwelling
and third party dwelling.)
4.12. The agencies surveyed were asked about the power to enter and the power to search
with regard to the following:
176
177
Business Premises
Dwellings with Business
Private Dwelling
Third Party Premises
Third Party Dwelling
The Competition Authority can pursue a civil action in the High Court to remedy breaches of section 4 of the Act. There is no
provision for a fine or sanction of any sort. (Cartel inquiries are dealt with in section 4 which provides that certain collusive activities
are a breach of the Act. Section 6 provides that any undertaking that does something prohibited by section 4 shall be guilty of an
offence and penalties will apply.) Regarding summary versus indictable offences, the Authority has the power to bring its own
proceedings in relation to summary offences.
The limit of the fine is statutory, being imposed by the Companies Acts. The limit of the late filing penalty is administrative, being
fixed by the Minister for Enterprise, Trade and Employment by Companies (Fees) Order made pursuant to the Companies Acts.
103
Agency
Restriction on Entry and Search
CAB178
A court order is necessary to enter any premises or dwelling and there must be suspicion
of offence. A search warrant/court order is required to search any premises in the audit of
a person.
A court order/ warrant is required to enter or search any premises or dwelling listed above.
CRO
No power of entry or power of search.
Dept of SFA
Inspectors can, on production of their I.D/Authority enter any employers premises. Where
such access is denied without a reasonable explanation, an obstruction case against the
employer would be considered. Inspectors also call to individuals homes to investigate
and/or review entitlements to S.W benefits. They do not in such instances have a power
of entry but are generally invited in by the customer.
No power of search.
Garda Bureau of Fraud A court order is necessary to enter any premises or dwelling and there must be suspicion
Investigation
of offence. A search warrant is required to search any premises or dwelling.
IFSRA
A private dwelling and a third party dwelling can only be entered on suspicion of an
offence, with agency authorisation and with court order/warrant. No precondition other
than agency authorisation is required for search or entry of business premises, dwellings
with business and certain third party premises such as warehouses holding business
records.
ODCE
Agency authorisation and a court order are necessary to enter and/or search any business
premises, or dwelling and there must be suspicion of an offence. The accountable persons
consent is not required.
4.13. The comparable position with Revenue is that Revenue can enter a business premises
without a warrant to examine some or all the aspects of a persons tax records. Revenue179 has
the power to search premises for particular records defined in the legislation which the authorised
officer has reason to believe have not been produced, although their production has been
requested. The search power and the power to copy or remove records from the premises
supplement the basic entry and inspection power.
4.14. An authorised officer in Revenue180 cannot enter a private residence or the portion of
premises used as a private residence without the consent of the occupier unless on production
of a warrant issued by a Judge of the District Court authorising the officer to so enter. The approval
of an Assistant Secretary is necessary to request a warrant from a District Court.
4.15. Provision is also made that a Judge of the District Court may issue a search warrant if
satisfied by evidence given on oath that there are reasonable grounds for suspecting that a person
may have failed or may fail to comply with any provision of the Taxes Acts.181
178
179
180
181
A judge of the District Court may issue a search warrant, on hearing evidence of a Bureau officer who is a member of the Garda
Sochana, if he is satisfied there are reasonable grounds for suspecting that evidence of or relating to assets or proceeds deriving
from criminal activities is to be found in any place. A Bureau officer, who is a member of An Garda Sochana not below the rank
of superintendent, may issue a search warrant in circumstances of urgency where it is impracticable to apply to a judge of the
District Court for same. In such circumstances, the search warrant issued shall cease to have effect after a period of 24 hours has
elapsed from time of issue. In this section, place includes a dwelling.
Section 903, 904 and 905(2)(a)(iv)(B) of the TCA 1997.
Section 905(2)(e) TCA 1997.
Section 905(2A) TCA 1997.
104
Power to Seize Document and Records

Agency
Restrictions on removal of records
CAB
CAB can seize records to investigate with a view to prosecution and in specific cases. An
offence must be suspected and a court order obtained. No time limit applies to the
retention of records.
This power is invoked in criminal investigations and civil investigations of a general issue.
It is only available to an authorised officer. A warrant is required to seize
documents/records. Statutory time limit applies to the retention of records after seizure.
CRO
No power to seize documents/records.
Dept of SFA
No power to seize documents/records.
Garda Bureau of Fraud Records can be seized to investigate with a view to prosecution. A warrant/court order is
Investigation
necessary. No time limit apples to the retention of records.
IFSRA
The power is invoked in criminal investigations and in civil investigations of a general

issue. No preconditions apply to seize documents and no time limit applies to the
retention of records after seizure
ODCE
This power is invoked in criminal investigations to audit compliance and to investigate

with a view to prosecute. It is only available to an authorised officer. There must be
suspicion of an offence and a court order/warrant is required. A statutory time limit of 6
months, or until such time as proceedings commenced within that time conclude, applies.
In the absence of the commencement of proceedings, any extension beyond six months
requires an application to the District Court.
Appeal Mechanisms 182

Agency
Appeal on use of Powers
CAB
An appeal can be made to the Garda Complaints Authority or to a court on a point of

law or on the administrative discretion regarding the use of powers.
There is no specific appeal mechanism. The use of powers can be challenged by way of
judicial review in the High Court.
CRO
The case can be reviewed internally. All decisions of the Registrar of Companies may also
be judicially reviewed by the High Court.
Dept of SFA
Appeals can be made to the Social Welfare Appeal Tribunal. An appeal can be made to
the High Court on a point of law.
Garda Bureau of
Fraud Investigation
An appeal can be made to a disciplinary body or to court on a point of law.
IFSRA
An appeal can be made to the High Court. In future, an appeal will be available to the
Financial Services Appeals Tribunal with a further appeal to the court. An appeal to court
is always available by way of judicial review of the discretion regarding the use of
powers.
ODCE
The Directors power and functions are liable to judicial review.
182
Judicial review of administrative decisions is also an option and is the most common challenge to the exercise of Garda Powers.
105
Power of Arrest and Detention

4.16. Four of the seven agencies, ODCE, the Competition Authority, CAB and Garda have the
power of arrest and detention of suspected offenders for purposes of obtaining information,
including questioning of suspect. In addition, the same agencies have power of arrest and
detention of suspected offenders for purposes of advising of a criminal charge. Members of the
Garda Sochana are seconded to ODCE, the Competition Authority and to CAB and have use of
these Garda powers essentially. Most powers used by Garda are exercisable only by members
of the An Garda Sochana. IFSRA may use Garda to secure an arrest. (The comparable position
with Revenue is that an authorised officer in Revenue may be accompanied by a member or
members of the Garda Sochana and any such member may arrest without warrant any person
who obstructs or interferes with the authorized officer in the exercise or performance of duties.)183
In the various agencies the power of arrest is generally restricted to certain offences but is also
used by ODCE for certain compliance issues. Garda usually have power to arrest offenders who
obstruct them in the performance of their duties.
Power to Summon Witnesses
4.19. While some of the bodies have power to summon witnesses and examine under oath, the
use of this power is mostly confined to civil investigations of a general nature e.g. intelligence
gathering. The power is invoked in a criminal investigation only in CAB and the Competition
Authority.
Agency
Power to summon witness
CAB
CAB invokes this power in the audit of a person and in criminal investigation. The power
is not invoked by CAB in civil investigations of a general issue.
The Competition Authority invokes the power in matters of criminal investigation and civil
investigations of a general issue. Used extensively in civil investigations. Witness offered
the same immunities and privileges as a witness to the High Court. Summons evidence
can be used as general intelligence in regard to criminal investigations.
CRO
CRO does not have the power to summon witnesses and examine them under oath.
Dept of SFA
A Social Welfare inspector has power to interview184 but not the power to summon or
question under oath.
Garda Bureau of Fraud Garda do not have power to summon witnesses and examine them under oath. In
Investigation
general, Garda prosecute at the suit of the Director of Public Prosecutions and witness
summonses are usually served to secure the attendance of a witness in court to give
evidence on behalf of the prosecution in criminal case.
IFSRA
Investment Intermediaries Act 1995 (not used).
ODCE
The ODCE does not generally invoke this power in civil investigations of a general issue;
in exceptional circumstances, under section 8 of the CA 1990, an inspector may examine
a person under oath. The ODCE does not invoke the power in criminal investigations.
Section 22 of the CA 1990 provides that an Inspectors report under section 7 or section
8 shall be admissible in civil proceedings as evidence without further proof until the
contrary is shown but section 10 case has clarified that compelled evidence is not
admissible in criminal proceedings.
183
184
Section 906 TCA 1997.

The Social Welfare Consolidation Act 1993 provides that a social welfare inspector shall have power to examine either alone or
in the presence of any other person, as he thinks fit in relation to matters on which he may reasonably require information, every
person whom he find on any premises or place liable to inspection, or who he has reasonable cause to believe to be or to have
been an insured person, and to require every such person to be so examined and to sign a declaration to the truth of the matters
in respect of which he is so examined.
106
Other Measures
4.18. The majority of the agencies make provision for additional measures other than those
mentioned previously. In certain circumstances, ODCE may restrict or disqualify persons under
the provisions of the Companies Act 1990. IFSRA make provision for withdrawal of license and
publication. The Department of Social and Family Affairs maintain that coverage of local court
hearings in the local nationwide papers and naming defendants along with case outcomes has a
deterrent effect. The CRO may invoke a statutory power to strike the name of a company off the
register where the company has failed to file an annual return. A strike off notice is published in
Iris Oifigiu
il and a list of companies struck off is published on the CRO website.
107
CHAPTER 7
Full List of the Groups Recommendations

(1) In view of the Groups difficulties in establishing linkages between the usage of powers and
desired outcomes, the Revenue Commissioners should put in place a systematic approach to
assess the effectiveness of Revenue Powers; the approach could be based on internationally
recognised criteria of tax administration performance measurement, which might include the
trend over time of the cost to the taxpayer of complying with the use of powers.
(2) Revenue, in line with their re-organisation and re-structuring, should establish Regional
Powers Officers in each of the five regions. This officer (at least at Principal Officer grade)
would be accountable for the coordination of the operation of powers in line with Revenue
guidelines. All requests to use more intrusive powers would be routed through their office
therefore ensuring consistent treatment throughout each region. This should enable better
co-ordination and management information and monitoring of the powers. It may also
facilitate the identification of linkages between their actual use (indeed the request or
intention to use could be recorded) and measurable outcomes in terms of improved
compliance.
(3) A better targeting of the powers should be possible in order to improve the cost/yield ratio
given that the rates of nil targeted audits have increased in recent years and are running
close to 40%.
(4) Compliance costs resulting from the use of powers ought to be reduced where possible.
The compliance cost burden on taxpayers should always be actively considered by
policymakers as an issue in relation to the effectiveness of powers and by Revenue in relation
to the usage of powers.
(5) The Revenue Commissioners should periodically, say every three years, include a section on
the effectiveness or otherwise of their powers in their annual report to the Minister for
Finance.
Appropriate Balance of Revenue Powers

Authorisations
(6) The powers legislation should specify in all cases the levels of third party and internal
authorisations required to activate any of the above powers from Chapter 4.
109
(7) Regarding S900 and S901 one or more of the following should exist for the activation of
these information powers: a failure on the part of the taxpayer or notice is given of audit
or investigation.
(8) S906A should provide that the authorised officer should first request the information from
the taxpayer; that the taxpayer be given an opportunity to authorise or mandate the
information sought (unless this would prejudice a prosecution); and if the taxpayer fails to
so authorise, then the Revenue officer should apply to the High Court for approval to direct
this information be given.185
(9) The full authorisation requirements in regard to the use of S906 should be made legislative.
Search in Regard to Establishment of Tax Liabilities 186
(10) The power to search without warrant in S903, S904 and S905(2)(a) should be made subject
to a warrant from the District Court.
(11) A search warrant of the premises of a professional,187 where the professional is a third party,
should specifically restrict the search to files of a particular client or class of clients.
(12) A legislative precondition should be stated that the search should be limited to the records
relevant to the determination of a tax liability of a particular taxpayer or taxpayers or class
of taxpayers.
(13) In investigations into additional tax liability, the present statutory professional privilege
under section 905(2)(c) should apply
(14) Where an ex parte warrant is sought to establish a tax liability, the warrant of the District
Court should provide that in the event of a dispute about the relevance of any documents
or records obtained as a result of the search, they should be retained by the Revenue
solicitor for five days in his/her capacity as an officer of the court to permit the taxpayer
the opportunity to appeal to the Appeal Commissioners to determine any allegation as to
the relevance of the records so removed to any tax liability.
Criminal Investigation with a View to Prosecution 188
(15) There should be a stand alone power of criminal search.
(16) A search warrant issued in respect of the premises of a professional, where the professional
is a third party, should specifically identify the client or clients whose documents Revenue
are entitled to obtain.
(17) The current provisions of S905(2A) should stand in this context except for the condition
regarding an anticipated beach of the tax code i.e. reasonable grounds for suspecting that
185
186
187
188
Basis of application would be as in S907 and S908 ie that Revenue have reasonable grounds for suspecting that the taxpayer may
have failed or may fail to comply with any tax provision and that that would result in significant tax liabilities not being discharged.
Currently S903, S904, S905(2)(a)(iv)(B).
See case of Niemietz v Germany [1993] 16 EHRR 1997 for comments regarding lawyer/client confidentiality and searches
See also Chapter 5 regarding Prosecution Powers and Chapter 4 regarding retention of documents.
110
a person may have failed or may fail to comply with any provision of the Acts from which
the element of futurity should be deleted.
(18) To protect against unjustified disruption to taxpayers there should be limits on the length
of audit and an appeal to the Appeal Commissioners against breaches of the limit or an
appeal to stay an audit to ensure that audits do not go on for an unreasonable length of
time.
(19) The Appeal Commissioners should be given jurisdiction, subject to these arrangements
being practicable in terms of resources available to the Appeal Commissioners, to hear
appeals during an audit in regard to:
Revenues right in law to seek particular information;
Breach of proposed statutory limits on audit and/or request to stay an audit; and
Unreasonable disruption to business from the removal of current records and

equipment.
(20) Every such appeal shall be conditional on the taxpayer189 paying any tax which is not in
dispute.
Penalties
(21) The Group recommends the incorporation of the 2002 Code of Practice penalties scheme
into the tax acts with some additional elements:
189
Mitigation to be permissible within the bands outlined in Revenues 2002 Code of

Practice for Revenue Auditors.
Category of Innocent Error, attracting no penalty, to be recognized and to be

distinguished from that of Insufficient Care on the basis that the taxpayer has a good
track record of tax compliance for the three previous years.
The abolition of the 200% tax-geared penalty for fraud, as it is considered an

anachronism and possibly un-enforceable.
Categorization and mitigation will be, as heretofore, by agreement and this should be
explicit in the legislation and explained in any correspondence between Revenue and
the taxpayer.
In the absence of agreement, categorization of the incorrect return will initially be

deemed to be Gross Carelessness. For a categorization of Insufficient care or Innocent
Error to apply the taxpayer must prove these categorizations before the Appeal
Commissioners, with the usual onwards route via a re-hearing in the Circuit Court and
to the High Court on a point of law. For a categorization of Deliberate Default to
apply, Revenue must prove it before the Appeal Commissioners.
Currently taxpayer must pay tax in accordance with the information on his/her return.
111
A legislative provision to allow Revenue pursue in court the amount of penalty they
consider they are entitled to, i.e. not the full amount.
Current penalties regime should remain in place for all legacy cases as previously
defined.
Interest
(22) The Group agreed that a fixed interest rate would be more easily administered in the Irish
system and that the fixed rate should be sufficiently high to discourage businesses from
deferring their tax payments to Revenue. On balance, they recommend a rate of 10%
which represents the current Euribor rate of 2.5% plus 7.5%.
(23) That the 2% per month penal interest rate for fraud and neglect cases be abolished on
the basis that it is effectively redundant.
(24) That a limit be placed on the period for which interest will be charged on the lines of the
approach followed in BNR cases under paragraph 4.3 of Revenue Statement of Practice SP
Gen 01/01 effectively a roll up provision.
(25) That the interest charged on overdue tax be capable of compromise to a rate to restore
the time value of the money in defined situations, and that the time value of money be
expressed by reference to the Consumer Price Index, similarly to what is done for Capital
Gains Tax Indexation purposes.
(26) Defined situations would be as follows:
Innocent Error, based on similar proposition to that relating to penalties, in that a

good track record of tax compliance for the three previous years would mean the
full interest rate would be compromised on the basis that the payment would be
deemed to have resulted from an innocent error. This will be a rebut-able presumption
before the Appeal Commissioners and onwards.
Statutory recognition for a meritorious appeal case, so that where a taxpayer made
a genuine but mistaken interpretation of a tax provision and a substantial interest
charge was now due as a result of a determination of the Appeal Commissioners, the
taxpayer could apply to the Appeal Commissioners to ask that only the time value of
the funds should be restored to Revenue. If this was not found by the Appeal
Commissioners then Revenue would receive the full 10% rate.
(27) That each of these compromise situation carve-outs to the standard interest-charging
regime would be capable of appeal to the Appeal Commissioners for a determination.
(28) Current interest regime to remain for legacy cases as defined heretofore.
(29) That voluntary disclosure should be defined in and its consequences regulated by primary
legislation supported, where necessary, by subordinate legislation and administrative
directions.
112
(30) To qualify for voluntary disclosure the following should be required:
Disclosure in writing.
Payment of 80% of the estimate of the additional tax within a reasonable time.
The provision to Revenue of full details concerning the disclosure within a reasonable
time.
In default of agreement the time appropriate for the delivery of such information to
be determined by the Appeal Commissioners.
(31) Any dispute to whether the disclosure is voluntary or otherwise complies with the
requirements of legislation and any relevant directions to be determined in the event of a
dispute by the Appeal Commissioners.
(32) That full voluntary disclosure should confer on taxpayers other than those involved in legacy
case stipulated rights including the following:
Publication: exemption from publication of names as provided in S1086 of the TCA

1997.
Prosecution: non-selection of the subject matter of the disclosure for prosecution.
Penalties: the right to enjoy the prescribed rights of penalty mitigation under the new
proposed regime.
(33) Where Revenue propose to undertake the audit of a company separate notice should be
given to the directors of the company so as to ensure that such directors are not deprived
of an opportunity to make a voluntary disclosure in respect of their own affairs. If no such
notice is given to the directors the period in which voluntary disclosure may be made by
him or her shall not terminate with the audit of the company.
(34) The verification by Revenue officials of a particular item should be clearly designated as a
verification audit and such audit shall not terminate any right to make an effective voluntary
disclosure at a later time.
Voluntary Disclosure and Prosecution
(35) The Group recommends that the practice of Revenue not prosecuting revenue offences
admitted in the course of voluntary disclosure should be continued.
(36) There should be no disclosure of information obtained by Revenue from a voluntary
disclosure to other agencies save as may be required by law.
Publication of Tax Defaulters
(37) That the exemption limit aforesaid be increased to not less than \50,000.
(38) That the existing exemption limit be retained in respect of legacy cases as hereinbefore
defined.
113
Disclosure of information to Director of Corporate Enforcement and other Agencies

(39) There should be legislative protection from prosecution for a tax offence in a voluntary
disclosure case.
(40) That the Revenue Commissioners should not be required to provide information to the
Office of the Director in relation to the subject matter of a voluntary disclosure.
(41) In relation to information provided by Revenue to the Director under the Act of 2001 the
Group recommends that a procedure similar to that operated by the Disclosure of
Information for Taxation and Other Purposes Act 1996 should be introduced to address
the information exchange interface between Revenue and the Director.
(42) To the greatest extent consistent with legal obligations, the taxpayer should be notified of
any information passed by Revenue to any other regulatory agency in relation to his/her
affairs.
Removal and Retention of Taxpayers Records
(43) There should be an express statutory limit on how long the tax authorities can retain books
and records taken from a taxpayer.190 The Group recommends that this should be one
month.
(44) Where the removal of records and computing equipment would prevent the taxpayer
carrying on his or her business in an orderly manner, then Revenue should be able to
examine the records at the taxpayers premises.
(45) A right of appeal to the Appeal Commissioners should be provided where the taxpayer
feels removal of records and computer equipment prevents him carrying on business.
(46) If there is a dispute over the appropriateness of documents taken by Revenue, the Revenue
Solicitor should hold the records for one week to allow for adjudication on the
appropriateness of the relevance of the records.
(47) It should be provided that any unreasonable request for information should be capable of
being objected to before the Appeal Commissioners.
(48) Where Revenue make a verification audit check, this will have no implications for a taxpayer
(who is a third party in the matter under investigation) in relation to voluntary disclosure
and this should be notified to the taxpayer.
(49) The Group notes that the Revenue Commissioners have said they will consider applying
the civil service redress scheme when it comes into operation. There may be some merit
in making a payment in acknowledgement of the inconvenience caused where a customer
has been significantly inconvenienced by Revenue error, inaction or delay.
190
i.e. Not just for a reasonable time as in Section 905(2)(a)(D) of the Taxes Consolidation Act, 1997. Competition Authority and
Companies Office 6 months.
114
(50) In all cases where information is provided by a third party subject to a statutory provision,
it should be made explicit that the information provider cannot be sued for breach of client
confidentiality.
Streamlining of Powers
The overall approach to streamlining which they recommend is that:
(51) The gradation of powers from less intrusive to more invasive should be made transparent
in the legislation in line with the transitions from audit to investigation and investigation
with a view to prosecution.
(52) The legislation should specify what third party supervision and internal revenue
authorisation levels191 are required to activate the more intrusive powers.
(53) Existing prosecution powers192 should be separated from the other powers. This will protect
the rights of the taxpayer but should also help with the alignment of procedures to ensure
that evidence collected in a revenue investigation does not become tainted by selfincrimination and therefore inadmissible in a criminal trial. Also there should be an
(54) The appropriate avenue of appeal applying to each of the three categories above should
be clear from the legislation.
Need for Further Powers

General Right to obtain information
(55) The right of Revenue to obtain the documentation and information relevant to the
establishment and collection of all taxes (subject to appropriate safeguards and
authorisations) and the duty of taxpayers to provide such documentation and information
must be accepted and should be incorporated into legislation.
Automatic Reporting to Revenue
(56) The recommended scheme for automatic reporting is:
191
192
For all new accounts/investments in Irish financial institutions the institution should be
required to obtain and record the account holders/investors personal public service
number (PPSN), or foreign equivalent, and include such number in the automatic
reports made to Revenue.
Deposit takers (i.e. Irish banks, building societies, credit unions and the Post Office
Savings Bank) would be required to make an automatic annual report to Revenue in
respect of all resident individuals who earn deposit interest in a tax year the report
to include the name and address of the beneficial owner of the interest, the account
A number of sections already do this e.g. S901, S902A, but other significant powers are subject only to internal instructions for
authorisation in the Revenue Operations Manual e.g. S900, S904A, S905 (apart from S905 (2A) and S905 (2)(e).
currently S905 2A and S908A TCA 1997 are used exclusively for prosecution cases.
115
number(s) and for new accounts the PPSN and the gross amount of such interest
(no de minimis figure is proposed principally to deter account splitting);
Irish life assurance companies and collective funds would also be required to make an
automatic report to Revenue of all policies/investments which are cashed in, matured,
redeemed, surrendered, transferred or otherwise disposed of by resident individuals
in a tax year the report to include the name and address of the beneficial owner of
the investment at the time of cashing-in etc., the account/policy number(s) and for
new investments the PPSN and the amount involved;
In future details of all payments made by Government Departments and their Agencies
to taxpayers referenced by PPSN numbers should be transmitted to Revenue.
The statutory obligations as aforesaid should not take effect until the Minister for
Finance has been satisfied that the information technology systems of the Revenue
Commissioners are capable of receiving and handling such information and utilising it
effectively.
Every taxpayer should have available on request particulars on the information

supplied to Revenue in accordance with the proposed obligation.
Revenue, the Department of Finance and representatives of the financial institutions

should review the operation of automatic reporting not less than three and not more
than five years after the introduction of the obligation to ensure the system is operating
effectively and economically.
It should be determined that there are no unduly adverse social or economic

consequences of this proposal. If policymakers consider that the lack of a de minimis
provision would have social and economic consequences, a threshold for interest
reporting could be determined by Ministerial order subject to such safeguards as might
be considered necessary.
Offshore Assets and Overseas Payments

(57) Revenue should be given the power to obtain documentation and records in the power,
possession or procurement of a non-resident entity over which a person resident in this
jurisdiction has control. The existing statutory definition of control should apply in this
context.
(58) Revenue should first seek the information from the taxpayer direct and, only if the taxpayer
refuses, then make an application to the High Court.
(59) The Court may refuse the application if it is satisfied that it is impracticable for the taxpayer
to procure the required documentation or records.
Payments for services provided from countries with which Ireland does not have a tax treaty
(60) Taxpayers to satisfy Revenue that payments for services provided from countries with which
Ireland does not have a tax treaty are bona fide commercial transactions in the absence
of which tax can be assessed at standard income tax rates on the payment.193
193
this would operate like a deemed withholding tax.
116
(61) Provision for the refund of the tax if and when the Irish resident taxpayer satisfies Revenue
that the payment was bona fide made for services properly provided for the trade carried
on by the taxpayer by a supplier whose identity was established to the satisfaction of
Revenue.
(62) Revenue investigators should be permitted to question persons detained in Garda custody
in connection with an arrest-able revenue offence.
(63) A power for Revenue to access telephone records in criminal investigations subject to
authorisation by a Revenue Commissioner.
(64) The Group does not recommend granting to Revenue Authorities the powers of search
and production available under recent criminal justice legislation but would encourage
further studies to be undertaken in relation thereto by the Law Reform Commission or
otherwise194 independently from the urgency attaching to the annual Finance Act.
Appeals and Reviews of Revenue Powers

Appeal Commissioners195
(65) The jurisdiction of the Appeal Commissioners should be extended in the light of the
statutory amendments proposed to include appeals regarding:
the categorisation of penalties;
the application of interest rates in certain defined situations, and
the facts defining a voluntary disclosure.
(66) In addition the Appeal Commissioners should be empowered to adjudicate in a Monday

morning type session:
whether Revenue have a right in law to seek particular information,
breach of proposed statutory time limits on audit and/or a request to stay an audit
and
unreasonable disruption to business from the removal of current records and

equipment.
Subject to the provisos that
194
195
these arrangements are practicable in terms of resources available to the Appeal

Commissioners and
the taxpayer being required in all cases to pay the tax which is not in dispute.
Certainly there should be consultation with the policy area of the Department of Justice Equality and Law Reform which has been
involved in preparation of legislation regarding Garda powers.
These recommendations are repeated from Chapter 3 for completeness.
117
Administrative Reviews
(67) Revenue should continue to have an internal review function which would deal with issues
about the exercise of Revenues powers and believes that the related recommendations
about Powers officers in each region should assist these internal reviews in dealing with
complaints concerning the use of Revenue powers.
(68) The Group also believes that the External Reviewers should continue the role of quality
assurance on the internal customer service function effectively Revenue conduct issues
but recommends that they should have a profile more visibly independent of the Revenue
Commissioners and that their role should be better publicised.
118
APPENDIX A
European Convention of Human Rights Act 2003
The European Convention of Human Rights Act 2003 was passed by the Oireachtas in June 2003.
The Act shall come into operation on a day, no later than six months after the passing of the Act,
appointed by the Minister for Justice, Equality & Law Reform.
Prior to incorporation, cases under the Convention have to be pursued directly with Strasbourg.
After commencement cases may be pursued in the District Court and then to higher courts.
Under Section 5(1) of the Act, if no other legal remedy is adequate or available, the High Court
or Supreme Court may make a declaration stating that a statutory provision or rule of law is
incompatible with the States obligations under the Convention.
Section 5(2) provides that such a declaration will not affect the validity of the incompatible
statutory rule or its continuing operation.
A declaration of incompatibility
(a) Shall not affect the validity, continuing operation or enforcement of the statutory
provision or rule of law in respect of which it is made, and
(b) Shall not prevent a party to the proceedings concerned from making submissions
or representations in relation to matters to which the declaration relates in any
proceedings before the European Court of Human Rights. [9]
In cases of incompatibility with the convention, the Act makes provision as follows:
Section 5(3) provides that
The Taoiseach shall cause a copy of any order containing a declaration of incompatibility
to be laid before each House of the Oireachtas within the next 21 days on which that House
has sat after the making of the order.
Section 5(4) of the Act provides
Where
(a) a declaration of incompatibility is made,
(b) a party to the proceedings concerned makes an application in writing to the
Attorney General for compensation in respect of an injury or loss or damage
suffered by him or her as a result of the incompatibility concerned, and
119
(c) the Government, in their discretion, consider that it may be appropriate to make
an ex gratia payment of compensation to that party (a payment),
the Government may request an adviser appointed by them to advise them as to the amount
of such compensation (if any) and may, in their discretion, make a payment of the amount
aforesaid or of such other amount as they consider appropriate in the circumstances.
Section 5(5) provides In advising the Government on the amount of compensation for the
purposes of subsection (4), an adviser shall take appropriate account of the principles and practice
applied by the European Court of Human Rights in relation to affording just satisfaction to an
injured party under Article 41 of the Convention. [10]
Section 6 of the Act provides that before a court decides to make a declaration of incompatibility
the Attorney General and the Human Rights Commission shall be given notice of the proceedings
in accordance with the rules of court. The Attorney General shall be entitled to appear in the
proceedings and to become a party thereto as regards the issue of the declaration of the
incompatibility.
120
APPENDIX B
The Eskort System
Background
In 1995, the Common Registration System (CRS) was introduced which amalgamated all the
different tax heads into one common system. Within the CRS, information on the taxpayer under
each tax head is maintained. While the majority of the information is supplied by the taxpayer
himself in paper form, as in claim forms and tax return forms, which must then be converted to
electronic form, information also comes in the following forms:
Electronically with the Personal Public Service Number (PPSN) from, for example,
Financial Institutions for the purpose of SSIAs; Tax relief at source on mortgage interest
payments;
Electronically without the PPSN names and addresses of individuals who are paid
dividends from, for example, any Irish PLC.
Paper form, such as Form ST21, completed by solicitors on behalf of individuals in

relation to property transactions and submitted to Stamp Duty Section of Revenue;
Some information is given voluntarily by third parties e.g. tapes of rent subsidies paid to landlords
by the Health Boards.
Risk Analysis Team

Revenue has commenced processing Risk Analysis data by means of a computerized system
known as Eskort. Eskort is a Swedish product in use already in South Africa, the United States and
some Eastern European countries. The goal of the Risk Analysis team is to become experts in all
areas and to coordinate and collect the expert knowledge using software. Risk covers all areas,
debt management, audit, compliance etc. Risk arises through error, tax avoidance, tax evasion
and fraud and is manifested through non-reporting, false reporting, non-payment of tax etc.
The objective of the Risk Analysis program is to analyse all Revenue customers across a number
of profiles by applying rules to the data available. The profile of an individual will be built
through cross referencing data across the different tax heads and information submitted from
other sources. Profiles of individuals will be presented based on scores with regard to their risk
to Revenue for track record, potential tax at risk, confidence in rules, observation count, secondary
profile, and confidence in rules based on feed back from officers.
121
Timetable for the Risk Analysis system

A pilot program aimed at VAT and Payroll compliance will be run in October 2003. It is proposed
to extend the system to Income Tax and Corporation Tax in early 2004 and finally to Relevant
Contracts Tax, PAYE, Customs and Excise and Capital Taxes data to the system before 2005.
Current approach to Risk Analysis

Revenue has been tackling risk through different systems of type profiles. Returns and accounts
are manually screened and selection for audit is done manually. This has proved successful in that
targets have been met; over 16,000 audits are carried out per annum yielding \350million in
2002. However, using the manual approach does not always make the best use of skilled officers,
not all available information is used, not all cases are screened, risk evaluation is not consistent
and the risk is not evaluated in the context of the overall revenue risk.
The move to a risk based selection identifies the risks, evaluates the degree of risk and determines
the necessary action. This has a number of advantages; it is comprehensive (all data is included),
equitable (the same rules apply to each taxpayer) and consistent. Over time, it is hoped that it
will become flexible and adaptable. As a result, less manual screening will be required by Revenue
and non-compliance will not provide an opportunity to escape the process. There will be minimum
contact with the compliant taxpayer, more focus on the taxpayer rather than on the individual
return submitted, a transparent and equitable approach and better targeting of audits.
Scoring System
All taxpayers will be scored based on a set of complex rules. There will be a tolerance limit and
no risk will apply to those under a certain level. There is human intervention at the end of the risk
analysis process and that it will be up to the audit manager to make a decision based on the
score. Using this method, any errors should be picked up by the audit manager/selector before
an audit starts. Revenue will compare like with like by means of setting ratios based on gross
profit rates.
Exchange of Information
Information held by Revenue on the system can, in certain defined circumstances, be made
available to other bodies or other tax authorities. While certain information can be given to Dept
Social and Family Affairs, information on income is not transmitted. Certain information can be
given to other organisations such as to the Garda Sochana under CAB Act 1996 and to the
ODCE where there is a suspicion of a company law offence. In addition, Double Taxation Treaties
provide for the exchange of certain information.
122
APPENDIX C
Irish Response to Jurisdiction Questionnaire
Revenue Powers Group
5-9 South Frederick Street, Dublin 2 00353-1-6045381
Please tick appropriate box:

1. Powers of Revenue authority to establish tax liabilities
Country:
Ireland
2. Type of tax administration:

(a) Self Assessment
(b) Direct assessment
By all taxpayers
Business taxpayers
Only certain taxes

3. Obligation on taxpayer to file annual/periodic return
On notice
Without notice
(a) Consequences of not filing/late filing return

Interest
Penalty
Administrative fine
Court fine
Imprisonment
X*
Other Sanction
If rare please put * beside above.

Can tax authorities require further information
Mandatory basis
Yes
No
Only on notice
(b) Potential consequences of incorrect returns due to innocent error* or negligence

Interest
Penalty
Administrative fine
Court fine
*Comment: In the case of innocent error only interest applies
123
Imprisonment
Other Sanction
(c) Potential consequences of incorrect returns due to deliberate fraud

Interest
Penalty
Administrative fine
Court fine
Imprisonment
X*
Other Sanction
4. Is information on taxpayers sources of incomes available from third parties

Yes
No
Including financial institutions (re individual taxpayer)
Yes
No
only if reasonable suspicion of non compliance

Is taxpayer informed in advance
Yes
No
Automatic reporting by financial institutions

Reference by public reference number
Comment: The Financial Institutions are now obliged to report to the Revenue under revised money laundering
provisions.
Are there fines/penalties on third parties for failure to file returns on taxpayers?
Yes
No
Only if on notice
5. Upper level of cost to taxpayer of fines, interest and penalties as a percentage of tax liability, please tick
appropriate effective max
(a) Innocent Error
50%
100%
200%
300%
400%
Is this limit statutory
Administrative
Comment: Penalties are not charged for innocent error. Interest is charged at a daily rate equivalent to 1% per
month.
(b) Negligence
50%
100%
200%
300%
400%
Administrative
Comment: Interest is charged at a daily rate equivalent 1% per month. Penalties of 100% can be mitigated.
Under the Audit Code the penalty for insufficient care is 20% and this can be mitigated to 3%.
124
(c) Deliberate Fraud

50%
100%
200%
300%
400%
Administrative
Is intervention of court necessary to recover penalties Yes
No
Comment: Interest is charged at a daily rate equivalent 1% per month. Under the Audit Code 100% penalty is
applied for deliberate default and this can be mitigated to 10%.
In the absence of an agreement with the taxpayer, intervention of court is necessary to recover penalties.
6. Use of statutory powers
(i) Are there discretionary powers
Yes
No
(ii) Power to require production of books,

documents and records
(a) From taxpayer
Consent required
By court order
Notice required
X
(b) Are these preconditions before power is used
Yes
No
Comment: Taxpayer must have been given reasonable opportunity to deliver.

(c) How many years can a request go back
years
Comment: No restriction in the case of Fraud. Generally the audit will be on a recent year.
(d) From third party
With consent of taxpayer
By court order
On notice to taxpayers
Must tax authority request information from taxpayer before requesting information from third party?
Answer: No
Comment: There are certain third party returns which must be submitted to the Revenue under
legislation.
125
(e) Are records protected by professional privilege

Prescribed by statute
Yes
legal professional privilege
No
X
Both legal professional privilege and statute
Covering accountancy profession?

Comment: Some records of some professionals (legal, medical) are protected by professional privilege.
Once the records form part of the business records they are made available for inspection. Generally
Inspectors allow the names of clients to be suppressed.
(f) Can tax authorities access:
1. All records relating to tax liability
2. Personal credit card account

3. Personal bank accounts
4. Records of related persons
5. All records of a business
6. Records relating to resident controlled foreign entities

7. Details of property, including non-business assets
Comment: Where there is a link to business transactions the personal bank accounts and credit card
accounts can be examined.
(iii) Power of entry permitted
Business premises
Dwellings with business
Dwelling
Business Premises
of a third party
Dwelling of a third
party
By invitation
No
No
Comment: Power of entry to a place of business is permitted. The residence of the taxpayer cannot be
entered unless by invitation. Entry to a private residence without consent requires the approval of an Assistant
Secretary (to request a warrant) and said warrant from a District Court.
Preconditions for entry
Consent of taxpayer
Business premises
Dwellings with business
Revenue
authorisation
Court order
X
X
Private dwelling
Third party premises
Third party dwelling
126
Suspected
offence
(iv) Power of search permitted

Can tax authorities search:
Business premises
Dwellings with
business
Dwelling
Business
Premises of a
third party
Dwelling of a
third party
Limited to specific cases:
Yes
No
Do objective criteria have to be satisfied
Yes
No
Preconditions for Search

Suspicion of
offence
Consent
Authorisation
Court order
Business
premises
Dwelling with
business
Private
dwelling
Third party
premises
Third party
dwelling
(v) Power to seize documents/records

Is this available:
(a) To audit returns
Yes
No
(b) To investigate tax liabilities
Yes
No
(c) To investigate with a view to prosecution
Yes
No
(d) Only to an authorised officer
Yes
No
(e) Only in specific cases
Yes
No
Preconditions for seizure of documents/records:

(Please tick which apply)
(a) If offence suspected
court order
warrant
(b) Do time limits apply for retention of records by tax authorities after seizure
Yes
Statutory
No
Administrative
127
Warrant
7. Audit/Investigation of tax liabilities with a view to monetary settlement

(a) Does tax administration issue audit code of practice
After consultation with tax practitioners?
Yes
No
Yes
No
(b) Tick which one of these statements is true

(i) Once audit begins, burden of proof on taxpayer
(ii) Burden of proof is always on taxpayers
(iii) Burden of proof is on taxpayers when offence suspected

(iv) None of above.
(c) How is the transition from audit/investigation of tax liabilities to investigation with a view to
prosecution handled?
The auditor will normally discuss the case with the Audit Manager and liaise with
Investigations and Prosecution Division (IPD) before, with the District Inspectors
permission, submitting the case for consideration by the Admissions Committee of IPD. If
the case is considered by that Committee to be suitable for prosecution, the audit is
suspended and an investigation is commenced by IPD.
(d) Types of audit: Is notice given
Yes
No
In all cases
(i) Single tax (e.g. VAT, income tax)
(ii) All taxes
Which type is most commonly used?
(i)
(ii)
Note: (There are specific programmes for each tax type)

(e) Criteria applying to audit:
(i) Length of statutory limit on duration of audit
(ii) Length of administrative limit in duration of audit
(iii) What criteria trigger audit
X
Risk
Specify:
Cases are selected for audit following the screening of returns made by the taxpayer and
information held within the tax district. There is also a random audit programme whereby
taxpayers are selected for audit on a random basis.
(f) Must tax authorities give explanations in writing to tax payer during audit if
requested (e.g. why particular documentation relevant to a tax liability)
Yes
No
Only on a point of substance

Only in certain circumstances
Specify:
This is to fulfil the Charter of Rights requirements rather than there being legal reasons for doing so.
(g) Is there appeal available during audit regarding

use of powers
If so to which forum:
Tax authority
Review by Principal in
Customer Services Branch
along with an External
Reviewer.
Yes
No
Administrative tribunal
Court
The review does not affect the

legal right to have the point of
contention listed for hearing
by the Appeal Commissioners.
A re-hearing of a case can

take place in the Circuit Court.
A case can be listed for
hearing in the High Court on a
point of law.
Administration discretion re
use of powers
Only certain powers
Can appeal cover:

Point of law re use of powers
Yes
Comment: The taxpayer can ask the Ombudsman to review his case where appropriate.
8. Power to mitigate
(a) Is the imposition of monetary penalties confined to court authorities
Yes
No
Comment: In general, agreement is reached with the taxpayer on the level of penalty to be applied, thus
obviating the necessity to involve court proceedings for recovery.
(b) Do the tax authorities have power to reduce penalties
Yes
No
(c) Do the tax authorities have power to reduce interest

Yes
No
(d) In what circumstances does the power to mitigate apply

Hardship cases only
Negotiation in a settlement
Only in supervised situations
(e) Is the power of mitigation available

To authorised officer only
(f) What is the appeal mechanisms for interest or penalties
Tax authority
None
Court
(g) Is there an appeal mechanism against mitigation level
Tax authority
129
Court
None
9. Do you have a system of voluntary disclosure?

(a) Yes
Written
(b) No
Oral
Are the parameters described in

(a) legislation
administratively
(b) What consequences flow from voluntary disclosure

Comment: Greater level of penalty mitigation.
Publication of Taxpayers details and Settlement details does not arise.
Revenue will not initiate an investigation with a view to prosecution.
(c) Can a voluntary disclosure be used in any subsequent prosecution?
Yes
(see above at c. A voluntary disclosure is not made under caution)
No
Where a satisfactory disclosure is made Revenue will not initiate an investigation with a view to prosecution.
10. Investigation with a view to prosecution
(a) Is this treated as separate from audit/investigation of tax liabilities?
Yes
No
(It can be referred from an Audit)

(b) Are there powers which are used exclusively in investigation with a view to prosecution
Yes
No
(c) Are tax authorities permitted to require production of a wider range of records in an investigation of a tax
offence
Yes
No
(d) If so, is notice given of wider scope of inquiry at that point?

Yes
No
(e) Do tax authorities have the power of direct arrest and detention of suspected tax offenders for purposes of
obtaining information (including questioning of suspect)
Yes
No
Comment
Power of arrest in certain circumstances provided in Sec 27(11) VATA1972 but only for purposes of charge.
(f) Is this restricted to:
certain offences
certain taxes
on court warrant
(g) Have the police authorities the power to arrest without warrant offenders who obstruct tax authorities
Yes
No
130
(h) Are the same powers used by the relevant authorities to investigate tax offences as other criminal cases of
fraud
Yes
No
When Revenue are investigating they generally have to rely on Revenue powers only. If Garda were
investigating they have a greater range of powers including Revenue offences.
11. General
(i) Are there other special restrictions (e.g withdrawal of licences, prohibition from carrying on a profession) or
measures (e.g. publishing names of tax defaulters in newspapers or annual reports of revenue authorities
which can be used against tax defaulters)
Yes
No
Comment: There are tax clearance certificates required in order to obtain a licence to operate certain
businesses.
There is also provision to publish the name, address, settlement details and a description of the settlement
in the Official Government production (Iris Oifigiu
il) where a settlement exceeds \12,700 and includes
tax, interest and penalty. Similar provisions arise for taxpayers who are prosecuted having failed to submit
returns.
Can we use the above information provided by you in a published document
Yes
No
131
APPENDIX D
Acknowledgements
The Group Wish to Thank the Following for their Contribution to the
Review
1. Accountancy Group West
2. Irish Bankers Federation
3. Law Society
4. Institute of Taxation
5. Consultative Committee of Accountancy Bodies Ireland
6. Office of the Director of Corporate Enforcements
7. Office of the Comptroller and Auditor General
8. Director of Public Prosecutions
9. Irish Financial Services Regulatory Authority
10. Office of the Ombudsman
11. The Office of the Revenue Commissioners
12. Criminal Assets Bureau
13. Mr. C. Enright
14. Mr. P. Walsh
15. Mr. J. Maher
16. Mr. L. Wrigley
17. Mr. P. Lynch
18. Mr. & Mrs. Moroney
19. Mr. P. Hannigan
20. Those who made confidential submissions.
133
Agencies and Jurisdictions who completed the Questionnaire

Agencies
1. An Garda Sochana (Bureau of Fraud Investigation)
2. The Competition Authority
3. The Department of Social and Family Affairs
4. The Office of the Director of Corporate Enforcement
5. Irish Financial Services Regulatory Authority
6. Criminal Assets Bureau
7. Companies Registration Office
Jurisdictions
1. United States of America
2. Sweden
3. Australia
4. The Netherlands
5. Ireland
6. United Kingdom
7. New Zealand
8. Canada
134
APPENDIX E
Sections Mentioned in Submissions
Taxes Consolidation Act 1997:

Section 432
Meaning of associated company and control
Section 808
Power to obtain information
Section 811
Transactions to avoid liability to tax
Section 849
Taxes under Care and Management
Section 873
Proof that person is a Commissioner or officer
Section 900
Power to call for production of books and information
Section 901
Application to High Court for production of books and information
Section 902
Info to be furnished by third party: request of an authorised officer
Section 902A
Application to High Court: information from third party
Section 903
Power of inspection: PAYE
Section 904
Power of inspection: tax deduction from payments to certain sub

contractors
Section 905
Inspection of documents and records
Section 905(2A)
Application to a Judge of District Court for a search warrant
Section 905 (2)
Power of entry, examination, search and removal of records
Section 905(2)(a)(B)
Power of search
Section 906
Authorised officers and Garda Sochana
Section 906A
Information to be furnished by financial institutions
Section 907
Application
institutions
Section 908
Application to high court seeking order requiring information: financial

institutions
Section 908A
Revenue offence: power to obtain information from financial institutions
Section 909
Power to require return of property
Section 910
Power to obtain information from Minister of Government
to
Appeal
135
Commissioner:
information
from
financial
Section 917B
Return by settler in relation to non- resident trustees
Section 1002
Section 1052
Deduction from payments due to defaulters of amounts due in relation to

tax
Penalties for failure to make certain returns
Section 1053
Penalty for fraudulently or negligently making incorrect returns
Section 1054
Increased penalties in case of bodies of persons
Section 1061
Recovery of penalties
Section 1065
Mitigation and application of fines and penalties
Section 1066
False evidence: punishment as for perjury
Section 1077
Penalties for failure to make returns, etc and for fraudulently or negligently
making incorrect returns
Section 1078
Revenue offences
Section 1080
Interest on overdue income tax and corporation tax
Section 1084
Section 1085
Surcharge for late returns

Corporation tax- later returns: restriction of certain claims for relief
Section 1086
Publication of names of tax defaulters
Parts 38 and 47 (Chapter 4) in the Taxes Consolidation Act 1977

Part 38 Revenue Powers
Part 47 Revenue Offences
Reference to other Legislation in Submissions

Finance Act 1983
Section 18
Criminal Assets Bureau 1996

Section 14
Search warrants
Companies Act 1990

Section 8
Investigation of companys affairs on application of Minister
Section 10
Production of documents and evidence on Investigations
Section 14
Appointment and powers of inspectors to investigate ownership
Section 20
Entry and search of premises
Section 21
Provision for security of information
Competition Act 2002

Section 45
Authorised officers and their powers

136
Company Law Enforcement Act 2001

Section 17
Disclosure of information
Section 18
Information relating to offences under Companies Act maybe disclosed to

director or officer of director
Section 20
Entry and Search of premises
Section 23
Amendment of Section 10 of Act of 1990
Section 30
Repeal /substitution of Section 20 of the Act in 1990
Ombudsman Act 1980

Section 5(1)(a)(ii)
Section5(1)(a)(iii)
The person affected by the action has a right conferred by or under statute
(within the meaning of Section 3 of the Interpretation Act 1937)of appeal,
reference or review to or before a court in the state(not being an appeal,
reference or review in relation to a decision of a court)
The person affected by the action has a right of appeal, reference or review
to or before a person other than department of state or other person
specified in part 1 of the First Schedule to this act.
Criminal Justice Act 1984

Section 5
Section 6
Section 7
Access to solicitor and notification of detention.

Powers of Garda Sochana in relation to detained persons.
Regulations regarding treatment of persons in custody.

Section 51
Taking of evidence in State for use outside State.

Section 57
Disclosure of Information
Comptroller and Auditor General 1993

Section 3(7)
Shall examine the accounts of the receipt of revenue of the State collected
by the Revenue Commissioners and the accounts of such other persons
who receive money which is payable into the Exchequer as he considers
appropriate
Finance Act 1974

Section 59
Power to obtain information
Criminal Justice (Theft & Fraud Offence) 2001

Section 48
Section 52
Search Warrant
Order to produce evidential material
137
Criminal Law Act 1997

Section 4
Arrest without warrant
Postal and Telephone Services Act 1983

Section 98
Prohibition on interception of telecommunications messages
Value Added Tax Act 1972

Section 27
Fraudulent returns
138
APPENDIX F
Revenues Statutory Powers to Establish Tax Liabilities
Section 172 (f)
Powers in relation to the obligation of intermediaries in relation to relevant

distributions
Section 172
Inspection of dividend withholding tax
Section 182
Returns of company buying own shares
Section 235
Inspection of exemption to promote changes
Section 236
Inspection of art object
Section 238
Assessment of annual payment
Section 239
Assessment of payments by resident companies
Section 244(a)
Control of tax relief at source
Section 258
Assessment of interest on special savings accounts
Section 263
Inspection of non resident declarations
Section 267 (f)
Inspection of credit unions
Section 435
Request for information on close companies
Section 446
Request for information on IFSC
Section 453
Request for information on manufacturing relief
Section 470A (7)
Inspection of records of long term care insurers
Section 472 A (7)
Inspection of records of long term care insurers
Section 472(7)
Request for information on Trade Union subscriptions
Section 472 (7) (1) Power to require information in electronic format

Section 473 (9) (a) Power to require information on rent relief
Section 482 (7)
Entry to significant buildings and gardens
Section 486B (8)
Request for information on renewable energy
Section 505
Require information on investments in corporate trades
Section 508
Require information on designated funds
Section 510
Require information on profit sharing schemes

139
Section 645
Require information on development land dealing
Section 730G
Assessment and appeals: life assurance companies
Section 737(5)
Request for and examination of records of unit trusts and offshore funds
Section 739(F)
Assessments and Appeals: Units trusts and offshore funds
Section 783(5)
Power to make regulation to interalia require information on approved trust

schemes (Retirement Annuities
Section 784E
Power to raise assessments in relation to qualifying fund
Section 804 (4)
Requirement to furnish Revenue Commissioners with particulars as they think

necessary in relation to the estates of deceased persons in course of
administration
Section 808
Power to obtain information in relation to transfer assets abroad
Section 811
Power to control anti-avoidance
Section 812 (4)
Require information on income and gain from securities
Section 848M (4)
Assessment of gains on special savings accounts
Section 848R (11) Require information on special savings accounts

Section 849
Care and Management
Section 858
Evidence of authorisation
Section 868
Execution of warrants
Section 871
Power to combine certain returns and assessments
Section 872
Information matching within revenue
Section 880 (5)
Require partnership returns
Section 881 (2)
Require return from married persons
Section 882 (2)
Require return from trust companies
Section 884 (2)
Require corporation tax return
Section 887 (5)
Require information on record keeping software
Section 889
Require third party return
Section 890 (2)
Request return of interest paid
Section 892 (2)
Request information on nominee holders
Section 897 (2)
Request information on emoluments paid
Section 898 (4)
Request Copies of rates and valuations
Section 899
Inspectors Right to make Enquires
Section 900
Power to call for production of books, information etc
Section 901
Application to High Court: production of books, information etc
Section 902
Information to be furnished by third party; request of an authorised officer
Section 902A
Application to High Court: Information from third party
Section 903
Power of Inspection: PAYE
Section 904
Power of Inspection: tax deduction from payments to certain subcontractors
Section 904A
Power of Inspection: returns and collections of appropriate tax
Section 904B
Report to Committee of Public Accounts: publication etc
Section 904C
Power of Inspection (returns and collection of appropriate tax): Assurance

companies
Section 904D
Power of Inspection (returns and collection of appropriate tax): investment

undertakings Power of Inspections: claims by authorised insurers
Section 904F
Power of Inspections: claims by qualifying lenders
Section 904G
Power of Inspections: claims by qualifying insurers
Section 904H
Power of Inspection: qualifying savings managers
Section 904I
Power of Inspection: Returns and collections of dividend withholding tax
Section 905
Inspection of documents and records
Section 906
Authorised officers and Garda Sochana
Section 906A
Section 907
Application to Appeal Commissioners: Information from Financial Institutions
Section 908
Application to High Court seeking order requiring information: financial

institutions
Section 908A
Revenue offence: power to obtain information from financial institutions
Section 909
Power to require return of property
Section 910
Power to obtain information from Minister of the Government
Section 91
Valuation of Assets: power to inspect
Section 912
Computer documents and records
Section 914 (2)
Require returns from Stockbrokers etc
Section 915 (2)
Require returns by nominee shareholders
Section 916
Require returns by party to settlement
Section 917
Require returns on non-resident companies
Section 917L
Exercise of powers
Section 918
Making assessment to income tax
Section 919
Assessment to Corporation Tax
Section 920
Grant relief or allowance
Section 922
Assessment without a return
Section 923
Function of certain assessors

141
Section 924
Additional Assessment following fraud or neglect
Section 926
Estimation of certain amounts
Section 931
Capital Gains Tax Assessments
Section 948
Schedule E Appeals
Section 956
Right to make enquires within powers
Section 1034
Assessment of non-residents
Section 1036
Control of non-residents
Section 1048
Assessment of executors and administrators
Section 1057
Fine for obstruction of officers in execution of duties
Section 1059
Power to add penalties to assessments
Section 1065
Mitigation of penalties
Section 1078
Revenue offences
Section 1079
Duties of relevant persons in relation in relation to certain offences
Section 1080
Interest on overdue income tax and corporation tax
Section 1082
Interest on overdue income tax and corporation tax in cases of fraud or

neglect
Section 1083
Application of section 1080 to 1082 for capital gains tax purposes
Section 1086
Publication of names of tax defaulters
Section 1089
Status of interest on certain unpaid taxes and duties
Section 1094
Tax clearance certificates in relation to certain licenses
Appeals
Section 305
Appeals against determination of capital allowance
Section 372 (AT)
Appeals on questions on urban relief
Section 381
Appeals on determination of loss relief
Section 447
Appeals on questions on IFSC
Section 531 (17)
Appeals on R C.T.
Section 638
Appeals on apportionment on CGT
Section 658 (8)
Appeals on farm building allowances
Section 659 (7)
Appeals on farm pollution control allowance
Section 671 (14)
Appeals on mining allowance
Section 697
Appeals on shipping tonnage tax
Section 748 (4)
Appeal on purchase and sale of securities
Section 787(15)
Appeal in relation to relief on qualifying premiums of retirement annuities

142
Section 787D (1)
Appeal in relation to relief in respect of a contribution to a PRSA
Section 793
Appeal in relation to recovery of tax from trustee and payment to trustee of

excess tax recoupment
Section 806 (9)
Appeal against a decision by Revenue Commissioners in relation to change

in income tax on transfer of assets abroad
Section 824
Appeals on residence
Section 933
Appeals against assessments to Income Tax and Corporation Tax
Section 945
Appeals against Capital Gains Tax assessments
Section 949
Appeals against any determination of claim
Capital Acquisitions Tax Consolidation Act 2003

Section 45(a)
Deem secondary accountable person liable to tax
Section 45(12)
Power to inspect public records
Section 46(7)(a)
Require return of property
Section 46(7)(b)
Inspection of property and records
Section 46(8)
Require Additional Returns
Section 46(12)
Require Nil Returns
Section 47(2)
Require return under oath
Section 48
Require information for purposes of Act
Section 49
Assessment
Value Added Tax Act 1972

Section 18
Section 20&23(a)
Power of entry and inspection

Power to require security
Section 27
Power of arrest and seizure
Section 37
Power to deem
Section 20
Power to prevent unjust enrichment
143
APPENDIX G
Extract from OECD Report Improving Access to Bank Information for
Tax Purposes 2000: Table 3.1.1 Types of Information Automatically
Reported by Banks to Tax Authorities
Types of Information Automatically Reported by Banks to Tax Authorities

Opening / closing
of accounts
Austria
Interest paid and to

whom it is paid
X
X1
Belgium
Canada
Denmark
(in most instances)
where tax
withheld must be
reported
X
X3
Finland
France
Greece
Hungary4
Ireland
must report all

income from
capital
X
X5
X6
Japan
Korea
New Zealand
Norway
X2
X
Italy
Netherlands
Account balance
at year end
tax withheld from

interest paid
paid to residents
X
interest accrued at
year end
Portugal
interest on loans
use of household
savings for other
purpose
145
Other
Types of Information Automatically Reported by Banks to Tax Authorities

Opening / closing
of accounts
Spain
Sweden
United Kingdom
X8
United States
X9
1.
2.
3.
4.
4.
6.
7.
8.
9.
10.
Interest paid and to

whom it is paid
Account balance
at year end
Other
X7
X
interest on loans
X10
Where banks have to withhold tax on income from capital, they have to declare the type of income, the taxable
income and the justification of the tax exemption if any. The identity of the beneficiary must not, however, be
provided to the tax administration.
Where information on interest paid by a taxpayer to the bank and the debt claim on which the interest is paid,
information on transfer of bonds and securities has to be reported.
The following types of interest must be reported by banks: interest paid by the client to the bank and the balance
of the capital at the end of the year; interest paid on deposits that are not subject to the withholding tax on
interest income; and if interest is paid to a non-resident, the tax administration gets annual reports which are then
sent for control purposes to foreign countries by the tax administration.
Banks are required to report to the tax administration the date an account is opened, the account number, name
and address of the account holder within 15 days of the opening of the account.
Except when deposit interest retention tax has been deducted or where paid to a non-resident person on foot of a
statutory declaration by the person to that effect (which must be retained for Revenue inspection).
Banks must transmit to the Ministry of Finance RAD Models concerning withholding taxes on dividends paid to
non-residents when the bank acted as a broker in the transaction. All information relevant to transactions to and
from abroad concerning money, securities and bonds over 20 million.
Any income paid by banks or from any foreign securities when these institutions have received them in deposit or
to operate them as account managers. The reporting requirements also cover: the issue subscription and transfer
of securities including public debt, the transfer of mortgage securities in which credit institutions intervene.
Except where individuals have made a declaration that they are not ordinarily resident in the United Kingdom and
request that the information should not be passed to the Inland Revenue.
For U.S. persons who are not exempt recipients and non-residents aliens who are residents of Canada. Banks also
required to report certain other types of interest paid to U.S. persons.
Suspicious transaction reports and currency transaction reports.
146
APPENDIX H
Extracts from OECD Report Taxpayers Rights and Obligations 1990
Control and Search Powers of Tax Authorities Tables 9A, 9B
Administrative Discretion of Tax Authorities Table 11
147
148
To obtain all
Yes.
relevant information.
To obtain all
Yes.
To obtain all
Yes.
To obtain all
Yes.
To obtain all
Yes.
To obtain all
Yes.
Austria
Belgium
Canada
Denmark
Finland
General information
Extend to
third parties2
powers1
Australia
Country
Taxpayer must
produce all
records. etc.
Taxpayer must
produce all
records, etc.
Taxpayer and
others must
produce records
etc. Unrelated
persons if judicial
approval.
Dwellings
Business
premises
Dwellings
Search warrant required
Full and free

access.
If penal crime
suspected
Full and free access.
In particular
instances
5 a.m.-9 p.m.
Yes.
Yes.
No.
No.
Yes, limited
to penal
procedure.
Yes.
Yes.
Yes.
Yes.
Yes.
Full and free access at all times/all

No, but in fraud cases
reasonable times. Custodians to
warrants can be used.
provide reasonable assistance. No
notice required.
Business
premises
Taxpayer must
Full/free access
produce records, at reasonable
etc.
times.
To produce
records, etc.,
from taxpayer
including fishing
expeditions.5
Taxpayer must
produce records
etc.
Powers on the
production of
records, etc.3
Powers of entry to:
Control and Search Powers of tax authorities
[Question II.3 (a) (b) (c) (d) (g) Supplementary Q.1]
Table 9(A)
Warrant
required
Criminal
cases.
Penal
procedures.
Reasonable
suspicion.
Penal
procedure.
Penal
procedure.
Yes.
Yes.
Yes.
No.
Yes.
Seized only when warrant

used, however, can copy
documents under general
access provisions.
Limited to
Seizure of documents4
Yes, excluding info.

on which other
dept. cannot testify.
Yes.
Limited.
Yes, except public

credit, statistics and
postal cheque
institutions.
Yes.
Yes, unless
specifically
excluded.
Powers to obtain
inf. from other
govt. depts.
149
To obtain all
Yes.
To obtain all
Yes.
To obtain all
Yes.
To obtain all
Yes.
To obtain all
Yes.
To obtain all
Yes.
To obtain all
Yes.
To obtain all
Yes.
Germany
Greece
Ireland
Italy
Japan
Netherlands
New Zealand
General information
Extend to
powers1
third parties2
France
Country
Business
premises
Dwellings
No general power but can enter if

fraud suspected or for normal
inspection.
Prior judicial
authorisation.
Full and free access where deemed

necessary.
Full and free

access during
normal working
hours.
Full and free access at pre-specified

times.
Taxpayer must
produce records
etc.
Full and free access, including third

party premises.
Taxpayer must
Full and free access, but occupant
produce records, must agree unless written warrant.
etc.
Taxpayer must
produce records
etc.
Taxpayer must
produce records,
etc.
Taxpayer must
produce records
etc.
Taxpayer must
Full and free
produce records, access during
etc.
normal working
hours.
Taxpayer must
produce all
records, etc.
Taxpayer must
In general possible consent of
produce records, taxpayer sometimes required.
etc.
Powers on the
production of
records, etc.3
Powers of entry to:
No.
Yes.
No.
Yes.
No.
No.
Yes.
Yes.
Business
premises
Documents
and written
evidence
cannot be
reproduced.
None.
No.
Yes.
Criminal
cases.
Criminal
cases.
No except
Criminal
criminal cases cases.
Yes.
No.
Yes.
Warrant
required
No.
No.
Yes.
Only in case
of opening
safe, sealed
envelopes,
etc.
No.
Tax fraud and No.

reasonable
suspicion.
Tax fraud.
Yes.6
Yes.
Reasonable
suspicion of
fraud cases.
Limited to
Yes.
Dwellings
Table 9(A) (continued)
Yes unless
specifically
prohibited (e.g.
Statistics
Department).
Yes, unless
specifically
prohibited.
Yes.
Yes.
Yes.
Yes.
Yes, as for third

parties.
Generally, yes.
Powers to obtain
inf. from other
govt. depts.
150
To obtain all
Yes.
To obtain all
Yes, for
relevant information. certain
groups.
To obtain all
reasonable
information.
Sweden
Switzerland
Turkey
Yes.
To obtain all
Yes.
Spain
To obtain all
Yes.
Portugal
Yes.
All information
relevant on a
specific tax-payer
and certain
information on
unrelated taxpayers.
General information
Extend to
powers1
third parties2
Norway
Country
Taxpayer must
produce records
etc.
Taxpayer must
produce records
etc.
Taxpayer must
produce records
etc.
Taxpayer must
produce records
etc.
Taxpayer must
produce records
etc.
Taxpayer must
produce records
etc.
Powers on the
production of
records, etc.3
Taxpayer must
normally be
present.
Only with the

consent of
taxpayer or with
a warrant.
Taxpayer must
normally be
present.
Dwellings
Access limited to Only with

business hours.
warrant.
Access only
Yes.
under certain tax
investigation.
Full access, but

force cannot be
used.
Full and free

access with
taxpayers
consent.
Full and free

access.
Full access, but

force cannot be
used.
Business
premises
Powers of entry to:
Yes.
Yes.
Yes.
Yes, if
taxpayer
resists.
No.
No.
Business
premises
Yes.
Reasonable
suspicion.
Yes.
Yes.
Yes.
Yes.
Dwellings
No.
Warrant
required
No.
Reasonable
suspicion.
Yes.
Yes.
Yes.
Serious fraud. Yes (by tax

officer).
None.
Documents
No.
may be taken
for a limited
period of
time.
Criminal
cases.
Limited to
Yes.
Yes, except
defence exchange,
foreign relations
depts.
Yes.
Yes.
Normal rules, but

under review.
Powers to obtain
inf. from other
govt. depts.
151
To obtain all
Yes.
United States
Dwellings
Can reasonably enter if serious

fraud suspected and warrant issued.
Business
premises
Taxpayers must
Entry with the consent of taxpayer
produce records, or through court order.
etc.
Taxpayer must
produce records
etc. subject to
decision by
Commissioner
(including
fraudulent
accounting).
Powers on the
production of
records, etc.3
Yes.
Yes.
Business
premises
6.
5.
4.
3.
2.
1.
Warrant
required
Tax offence.
Yes.
Serious fraud. Yes.
Limited to
Generally yes.
Yes.
Powers to obtain
inf. from other
govt. depts.
In most countries the tax legislation contains provisions which enable the tax authorities to gain access to information and to require the production of documents by the taxpayer. Many, but not all
countries, can exercise these powers vis-a`-vis third parties.
Generally limited to third parties who are linked in some way to the taxpayer.
Generally covers books, documents, papers and contracts and includes requiring the taxpayer to attend and give evidence.
In all cases, limited to information relevant to the assessment of tax.
But formal notice must contain the name of the taxpayer.
Where there is a risk of evidence disappearing, a court order is not necessarily required to conduct a search.
Yes, unless
taxpayer
consents.
Yes
Dwellings
Note: This table does not cover the requirements as regards the type and form of accounting records that taxpayers must keep.
To obtain all
Yes.
General information
Extend to
powers1
third parties2
United Kingdom
Country
Powers of entry to:
152
Legal advisor client privilege applies

to limited range of documents.
Accountant/lawyers client privilege.
Banks, credit and saving institutions

(except if they are suspected of taking
part in a fraudulent scheme). Liberal
professions (subject to appeal).
Solicitors client privilege.
None.
None.
Doctors, lawyers (with some

limitations).
Bank secrecy.
Liberal professions, priests, lawyers.
Austria
Belgium
Canada
Denmark
Finland
France
Greece
Germany
Professional secrecy rules
Australia
Country
Taxpayer may lodge an objection.
No (however, in limited cases taxpayer

may appeal to the court against abuse
of authority).
Ordinary appeals procedure.
Yes. (The Inland Revenue Directorate

and then the Inland Revenue
Department).
Possibility of appealing against the use

of control and search powers
Penalties on non-compliance with

authorities control and search powers
Relatives of taxpayers not required to provide

information as are others if subject to penalties.
Taxpayers have right to hearing before administrative
decision taken.
None.
Administration cannot initiate a new control on a tax

which has already been controlled.
None.
None.
None.
None.
Taxpayer can refuse to provide information on

relatives or if provision of information risks penal
prosecution of that person.
Fines.
Fine for persons who violate secrecy

code and disclose information
concerning taxpayers.
Fines.
Fine or in serious cases imprisonment.
A penalty and/or prison term can be

imposed for failure to comply.
For failure to comply (fine).
For failure to comply: administrative

fine.
Taxpayer can complain to Ombudsman. Taxpayer

For failure to comply (fine) and for
can also complain to Privacy Commissioner. Collector obstruction (fine + imprisonment).
must abide by Information Privacy Principles (see
Table 6).
Other limitations
Control and Search Powers: Limitations and Penalties
[Question II.3 (e) (f) (h)]
Table 9(B)
153
Liberal professions.
Liberal professions may withhold

sensitive information.
Spain
Sweden
Legal profession.
New Zealand
Bank secrecy, though tax authorities

can contest. Liberal profession.
Very limited scale (ministers of religion,

barristers, etc., medical practitioners).
Netherlands
Portugal
None.
Japan
None.
Generally, liberal professions and bank

secrecy.
Italy
Norway
Banking. Professional communications.
Professional secrecy rules
Ireland
Country
Appeal to administrative court if

information is sensitive (seizure). None
if no coercive measures used.
Other limitations
No, unless those in connection with bank secrecy,

client privilege, etc.
None.
None.
Suspects have rights provided by the Criminal Code.
None.
None.
None.
None.
The Spanish legislation does not

None.
provide for a specific appeals
procedure against the use of such
powers, but taxpayers are entitled to
use the ordinary appeals procedure
when they think that the tax authorities
powers are not performed within the
law.
Ordinary appeals procedures and to

Ombudsman.
Ordinary appeals procedures.
None.
If decision is not in accordance with

principles of proper administration.
Generally.
None.
Possibility of appealing against the use

of control and search powers
Control and Search Powers: Limitations and Penalties
[Question II.3 (e) (f) (h)]
Table 9(B) (continued)
Fines.
Administrative fines.
Fines.
Fines.
Penalties for failure to comply.
Fines.
Penalties for failure to comply.
Records, etc., not produced at the

time of audit cannot be subsequently
taken into account.
For obstruction (fine/imprisonment).
Penalties on non-compliance with

authorities control and search powers
154
Taxpayer fails to file a return or the record produced The tax can be mitigated or remitted on
by taxpayer does not correspond to a justifiable base. application from the tax payer if it obviously
is inequitable to demand payment.
Instalments may be allowed.
Norway
In cases of hardship, tax may be paid by

instalments or it may be written off.
Taxpayer fails to file a return. Authorities are

dissatisfied with the return. Non-resident controlling
business is recognised as if it produces insufficient
income or excessive losses.
Postponement of tax by not more than one

year if tax creates undue hardship due to
e.g. illness, natural disaster, or close of his
business.
New Zealand
Taxpayer fails to keep proper accounting books.
Japan
*Remission of additional tax if voluntary

disclosure is made in early stage of
assessment.
Remission of penalty if voluntary disclosure

is made by a taxpayer.
When making a reassessment or additional

assessment the tax inspector should
ascertain the degree of fault and in fraud
cases the so-called recidive in determining
the amount of the administrative fine. There
are directives for waiving administrative
fines. The regional director of taxes has the
power to waive the administrative fines.
No.
Payment by instalment for companies can

No.
be allowed to maintain employment level or
to ensure provision of public services.
If a tax return is not filed or in case a tax return is

In cases of hardship all or part of debt may
suspected to be incorrect and records are unreliable, be waived. Upon request payment may be
or if the taxpayer does not comply with the obligation deferred or paid by instalments.
to produce information or records for inspection.
Taxpayer fails to file a return. When information

provided by taxpayer is incomplete, false or inexact.
Italy
Power to negotiate level of tax penalty
None on tax legally due except when

Remission of penalty if voluntary disclosure
formally written-off. Statutory grace period of is made and the comprehensive replies are
two months for income tax purposes and
made promptly.
one month for corporation tax.
Discretion to waive or reduce tax liability

or allow grace periods
Netherlands
Authorities are dissatisfied with the submitted return.
Power to determine the tax base where information

provided is insufficient or clearly incorrect
Ireland
Country
Administrative Discretion
[Question II.5 (a)-(d) [Supplementary Q.4]
Table 11 (contd.)
APPENDIX I
Current Sources of Information to Revenue
A. Returns of Information
(1) Informant Reports (Good Citizen Reports)
(2) Forms 46G fees and commissions s 889
(3) Returns relating to property
Forms Rent 1 (Claim for Rent Relief) s473
Forms 8-3 (letting agents) s 888
Rent Subsidy Returns from the Health Boards s910
particulars delivered ST21s
(4) Capital Taxes Returns
Forms AC67 (Inland Revenue Affidavit)
(5) Third Party Returns
Forms 8BB return by intermediaries in relation to the opening of a foreign bank

account s895)
Form 8D/C return by intermediaries in relation to investment in offshore life policies

and collective funds S 896
Form 21 R return by nominee holders of securities s 892
Form 8 2 return by person in receipt of income of others s 890
Forms 8BA return of interest paid without deduction of tax s 891
(6) Lists of New Taxi Licence Holders

(7) Information from foreign revenue authorities received under the Mutual Assistance
Procedures
(8) Information received from other Government Departments under the Powers contained in
ST 910 TCA 97
(9) Misc Databases eg High Value Cars/ Antiques /Register of boats etc.
155
(10) Access to Land Registry Electronic Access Service Computer system and Companies
Registration Office.
(11) Returns of Dividend Withholding Tax s172K
(12) Returns by Special Savings Incentive Account Managers s848Q
(13) Returns by auctioneers etc. s914
B. Statutory and International Disclosure Mechanisms

Disclosure of Certain Information for Taxation and Other Purposes Act 1996
Section 1 of the Disclosure of Certain Information for Taxation and Other Purposes Act 1996
provides for the disclosure of information by the Revenue Commissioners to garda not below
the rank of chief superintendent or to a body set up under statute or by the Government to target
the assets of criminals, where the Revenue Commissioners have reasonable grounds to suspect
that a person may have derived profits from unlawful activity, and that the information would
assist an investigation, or that it is in public interest.
Central Bank and the Financial Services Authority of Ireland Act 2003
Central Bank and the Financial Services Authority of Ireland Act 2003 made provision for the
exchange of information between the Revenue Commissioners and the Irish Financial Regulatory
Authority.
The Act provides that named employees and officers of the Regulatory Authority (IFSRA of the
Central Bank) must advise certain specified relevant authorities,196 including the Revenue
Commissioners, where they suspect the occurrence, by a supervised entity, of a criminal offence
(tax evasion and failure to report money laundering of the proceeds of tax evasion are criminal
offences) or a breach of either the Companies Acts 1963 2001 or the Competition Act 2002.
Information contained in the report may only be used by Revenue, or the specified authority, for
specified purposes. This obligation does not apply where the entity concerned has already
reported the matter to Revenue or where EU law obligations of professional secrecy prohibit the
disclosure. In the event that EU law prohibits the disclosure, the Financial Services Regulator must
issue a disclosure notice to the entity concerned and advise Revenue that the notice has issued.
In this case, the financial institution must disclose the fact it has been put on notice in this way in
the Directors annual report.
In addition the Financial Services Regulator may disclose information to the Revenue such that
no other supervised entity can be recognised. Revenue must comply with EU professional secrecy
rules in relation to the information received by it from the Authority under section 33AK.
Under section 33AK(9) where in the opinion of Revenue there is information which may related
to the commission of an offence or a failure to comply with an obligation under specified
legislation, that matter must be reported to the Financial Services Regulator.
196
Section 33 AK(3) provides for information disclosure to an Garda Sochana, the Director of Corporate Enforcement, the
Competition Authority and other such bodies, in addition to Revenue.
156
Company Law Enforcement Act 2001

Reporting of Offences
The ODCE provides Revenue with information197 obtained pursuant to the exercise of company
law powers which would be regarded as relevant to Revenue in investigation of possible tax
evasion. The reciprocal provision in section 18 of the Company Law Enforcement Act 2001
enables Revenue to provide the ODCE with information in relation to possible company law
offences.
Data Protection Act 1988

The Data Protection Act 1988 also imposes conditions regarding transfer and disclosure of
personal data. However, there is provision for waiver of protection from disclosure of personal
data under section 8(e) and section 8(b) of the Act where the disclosure is required by or under
any enactment or by a rule of law or order of a court, or where required for the purpose of
preventing, detecting or investigating offences, apprehending or prosecuting offenders or
assessing or collecting any tax, duty or other moneys owed or payable to the State, a local
authority or a health board, in any case in which the application of those restrictions would be
likely to prejudice any of the matters aforesaid.
Criminal Justice Act 1994 (as amended)

The Auditing and Accounting Regulatory Authority Bill 2003 provides that company information
can be communicated to Revenue by the supervisory authority where the supervisory authority
believes that information is connected to the functions of the body to which the disclosure is
made.
Criminal Justice (Theft and Fraud Offences) Act 2001

Section 59 of the Criminal Justice (Theft and Fraud Offences) Act 2001 provides that if a person
in auditing the accounts of a firm or in assisting with the preparation of any material relevant to
the keeping of the accounts of the firm, and finds that an offence under the Criminal Justice (Theft
and Fraud Offences) Act 2001 (sections 8, 12 to 15, 49(1) and 52(8) may have been committed
by the firm concerned or by an officer or employee of the firm, the person should, notwithstanding
any professional obligations of privilege or confidentiality, report this fact to a member of the
Garda Sochana.
The Auditing and Accounting Regulatory Authority Bill 2003

Confidential Company Information
Section 31 of the Auditing and Accounting Regulatory Bill 2003 deals with the issues of
confidentiality of information obtained by the supervisory authority. It also sets out the specific
bodies, including the Revenue Commissioners, to which information can be communicated where
the supervisory authority believes that information is connected to the functions of the functions
of the body to which the disclosure is made.
197
Section 21Companies Act 1990 (as amended)
157
Directors Compliance Statement

Section 43 of the Auditioning and Accounting Regulatory Authority Bill 2003 introduces an
obligation on directors of a company to prepare a compliance statement concerning the
companys policies respecting compliance with its obligation that these be in writing, be approved
by the board of directors obligations under company law, tax law or any other statutory law which
would have a material impact on the companys financial statement. It also introduces an
obligation that these be in writing, be approved by the board of directors to include in their
annual report that they are responsible for securing the companys compliance with their relevant
obligations and what procedures they have in place to achieve such compliance, confirm that
they have, where necessary, reviewed the procedures and give their opinion on the extent to
which that have secured compliance with their obligations.
Duties of relevant persons in relation to certain revenue offences

section 1079 TCA 1997
Under section 1079 Taxes Consolidation Act 1997, all auditors and tax advisers who become
aware in the course of their normal work of material tax evasion or non-compliance committed
by a client company must report this to the company and request that the matter be rectified or
that the company should report the office to Revenue. It further provides that, if at the end of 6
months, it is not established to the satisfaction to the auditor of adviser that the matter has been
so rectified or reported, the auditor or adviser must cease to act as auditor, or cease to advise
the company in tax matters, for a period of either three years from the date of the
(auditor/advisers) report to the company or until the auditor or adviser is satisfied that the matter
has been rectified or reported, whichever is the earlier. Any resignation under this section must
also be reported to Revenue. Nothing in the section is to prevent a person assisting or advising a
company in preparing for or conduction legal proceedings, either civil or criminal, which are
extant or pending at the end of the 6 month period in question. The list of reportable offences all
relate to serious tax evasion. The question of whether there is material tax evasion is a matter for
the auditor or adviser in any particular case to assess taking account of his/her own professional
standards and the requirements of the section.
The section was introduced in 1995 arising out of a recommendation in the Beef Tribunal Report.
At the time the section caused considerable disquiet in the tax and accountancy professions. (It
should be noted that the Code of Ethics of the various accountancy and tax adviser bodies have
sections dealing with procedures where tax evasion is discovered).
Tax Information Exchange Agreements

The 1998 OECD Report entitled Harmful Tax Competition: An Emerging Global Issue identified
the lack of effective exchange of information as one of the key criteria in determining harmful tax
practices.
The OECD Project on Harmful Tax Practices resulted in 31 jurisdictions, including Ireland, making
commitments to the principles of transparency and effective exchange of information. Following
these commitments, an OECD Model Agreement on Exchange of Information in Tax Matters for
the purpose of promoting international co-operation through effective exchange of information
was drawn up as a template for Tax Information Exchange Agreements (TIEAs). The Model
Agreement sets out minimum standards in relation to effective exchange of information between
OECD Member countries and committed jurisdictions.
158
A Tax Information Exchange Agreement will not only facilitate exchange of bank information but
will also provide access to information about the ownership of companies, partnerships and trusts.
TIEAs allow such information to be obtained even if the jurisdiction from which information is
requested does not need such information for its own tax purposes. Information can also be
exchanged without regard to whether the conduct being investigated is considered a crime in the
jurisdiction from which information is requested.
Mr. Frank Daly, Chairman of the Revenue Commissioners, announced in his speech on
International Financial Services Tax Compliance that Finance Act 2003 contained an
important provision extending revenue powers to facilitate cross border exchange of
information. Notwithstanding that there may be no domestic interest involved in a particular
case, revenue powers can in future be used to obtain information relevant to tax liabilities in
countries which Ireland has a tax treaty.
Under the terms of any such agreement, the committed jurisdiction will be obliged to exchange
information relevant to criminal tax matters from 1 January 2004 and from 1 January 2006 for
civil tax matters
159

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Revenue Powers Group

Report to the Minister for

Development of Revenue Powers

Workings of the Revenue Powers Group

Chapter 1: Executive Summary

Main Statutory Powers Reviewed

Effectiveness of Existing Powers (Chapter 2)

The Appropriate Balance of Revenue Powers (Chapter 3)

Streamlining of Existing Powers (Chapter 3)

Need for Further Powers (Chapter 4)

Appropriate Appeal or Review Mechanisms on Powers (Chapter 5)

Comparable Powers in other Jurisdictions and Regulatory Authorities

Table A: Use of Non-Routine Powers

Chapter 2: Effectiveness of Revenue Powers

Changes in Revenue Organisation

Usage and Effectiveness of Powers mainly used in Audits

Breakdown of Audit, Investigation and Prosecution Powers

Numbers of Audits Carried Out 1999-2002

Number of audits, audit yields and revenue yields 1990-2002

Average Yield per Audit

Underlying Factors behind Audit Yield Variances

Usage and Effectiveness of Powers mainly used in Investigations

Use of non-routine powers: 1999-2003 (to date)

Aggregate of settlements received from special investigations (\m)

Usage and effectiveness of powers used in Prosecution

Results of Prosecution of Income Tax Non-Filers 1997 to 2002

Revenues role in investigation with a view to prosecution

Prosecution for serious tax evasion

Prosecution for non-filing

DIRT/BNR and Audit Investigations Yields 2000-2003

Prosecuted cases of serious tax evasion

Civil Penalties and their interaction with Prosecutions

Deterrent Value of Prosecution and Civil Penalties

The Groups Conclusions regarding the Effectiveness of Revenue Powers

Audits and Investigations

Chapter 3: Appropriate Balance of Powers Safeguards

S904A Power of Inspection: returns and collection of appropriate tax

S906A Information to be furnished by financial institutions

S909 Power to require return of property

Other Powers from Chapter 4

S906 Authorised officers and Garda Sochana

Search and Authorisation

Audit, Investigation and Mitigation

Mitigation of penalties and issues concerning interest

Comprehensive Audits Interest and Penalties as proportion of tax yield

Bogus Non-resident Cases Penalties and Interest

Published Cases as percentage of Total Settlements

Recovery of Civil Penalties

Compromise of Interest Rate

Prosecution and Voluntary Disclosure

Publication of Names and Prosecution of Offenders

Disclosure of Information by Revenue to other Official Agencies

Power to Remove and Retain Records.

Compliance with Orders

Streamlining of Existing Powers

Selected Revenue Powers

Chapter 4: Need for Further Powers

Automatic Reporting of Information by Third Parties

Automatic provision of information on interest payments on deposits in financial

Automatic reporting of Payments made to taxpayers by Government

Offshore Assets: Powers to establish beneficial ownership of offshore assets

Sone other Issues Considered in this General Context