The Office of the Revenue Commissioners has told the construction industry that it is targeting the sector in the war against the black or shadow economy.
The Irish Small and Medium Enterprises body recently estimated that the black economy could be worth up to €25bn annually, and could cost the exchequer up to €5bn in uncollected tax each year.
The Construction Industry Federation has been voicing concern for some time about the impact of black economy activity on tax-compliant building firms.
Director of Policy Martin Whelan said the total value of construction in Ireland this year is around €14bn, but said it is believed that €2bn of that is outside the tax net.
In a memo to the Construction Industry Federation, a revenue official acknowledged that during a recession, the potential for black economy activity outside the tax net increases.
Revenue is focusing its enforcement activities on sectors which have the potential to operate using cash and which 'poses the greatest risk to the Exchequer.'
Revenue has included the construction sector in that category, with its compliance programmes targeting one-off housing and repair and renovation projects for private consumers.
In 2010 Revenue completed over 2,200 audits in the construction sector with a yield of €61m.
In addition, the Revenue Joint Investigations Unit with the Department of Social Protection carried out almost 6,000 'interventions' last year, recouping tax, interest and penalties of €5.5m for Revenue.
It says that in the experience of the Revenue Commissioners, black economy activities are carried out by people and businesses that are already in the tax system, including in the professions.
The Joint investigations Unit says that understating sales or income, getting paid in cash, paying their employees in cash off the books, and individuals doing so-called 'nixers' outside their normal taxed employment or while signing on for social welfare is under investigation.
The memo states that due to the collapse in the construction sector, there is a huge surplus of construction capacity competing for one-off construction jobs, resulting in intense competition for jobs.
Revenue says cooperation from businesses who are being undercut by the black economy is essential, because detailed information on what they call 'unscrupulous traders' is required.
The Revenue has invited various trade groups to discuss practical exchanges of information on the black economy at national level.
It also calls on consumers to make sure they get invoices and receipts.
