The Revenue Commissioners have announced a major new investigation into undisclosed funds invested in Life Assurance products over the past 25 years. The investigation is targeting all those who have invested untaxed income in lump sum or unit linked investment funds associated with life assurance policies.
They are being given six weeks to indicate to the Revenue that they will make a voluntary disclosure of their full tax liabilities. A further two months will then be allowed to allow people to calculate their liabilities but they will have to pay up in full by July 22.
The new voluntary disclosure scheme and the clampdown on unpaid tax is similar to the schemes offered to holders of bogus non-resident accounts and offshore assets in the past. Both of these netted hundreds of millions of euro for the Exchequer.
It is not yet known how much untaxed income may have been invested in Life Assurance investment products. However, official figures from the Life Assurance industry shows that over €33 billion is currently invested in such products, with €25 billion invested between 1988 and 2001 alone.
If only a few per cent of such investments involved hot money, then this investigation has the potential to net hundreds of millions of euro for the Government.
The Revenue promised today that they will use their new powers to get full information from insurance companies about investors and, from May 23 will vigorously pursue all those who fail to avail of the voluntary disclosure opportunity they are now offering.
These who do avail of the voluntary disclosure scheme will be entitled to reduced interest and penalties on taxes that have been evaded. They will also avoid prosecution for tax offences and ensure that their name is not included on the official tax defaulters list.
However, anyone who fails to come clean and is subsequently found to have evaded taxes will be subjected to increased interest and penalties on the taxes due, will have their name published as a tax defaulter, and will be liable to prosecution through the courts.
The Revenue Commissioners are targeting all taxes that may have been due on the undisclosed incomes, including, income tax, capital gains tax, capital acquisitions tax, VAT, excise duties and PRSI.
The Chairman of the Revenue Commissioners, Frank Daly, told the Oireachtas Public Accounts Committee last November that information collected from earlier investigations into bogus non-resident accounts and offshore accounts and assets had indicated that Life Assurance linked investment products could had been used in the evasion of taxes in some cases.
He said there were about 26 insurance companies operating here who managed such policies, but that only 10 to 12 of them were in, what he termed, the high risk area for tax evasion.
This is the third time in recent years that the Revenue Commissioners have used a voluntary disclosure scheme to target tax dodgers.
The first was in 2001 when they offered holders of bogus non-resident accounts the chance to come clean. On that occasion 3,675 people came clean, paying out an average of €62,000 in taxes, interest and penalties.
Revenue have subsequently caught another 8,200 holders of such accounts who failed to avail of the voluntary disclosure scheme and have netted an average of €42,000 from each. In total, the bogus non-resident account investigation has netted a total of €800m so far for the Exchequer.
A voluntary disclosure scheme was used for the second time last year when the Revenue targeted holders of offshore accounts and assets. So far €723m has been netted from that, with 13,000 people paying an average of €55,000 each.
To date the Revenue has collected €1.66 billion euro from 25,300 people caught up in its special investigations since 1988, including the Ansbacher, National Irish Bank, Tribunals, bogus non-resident accounts and offshore asset investigations.
Under the new voluntary disclosure scheme, all those who invested undisclosed incomes in life assurance products have until the May 23 to formally notify the Revenue Commissioners of their intention to make a voluntary disclosure of their tax liabilities and until July 22 to make a full settlement.
The Revenue Commissioners are to place adds in the national media tomorrow to warn people of the new investigation and to notify people of the opportunity for a voluntary disclosure.
