State boosts Revenue’s powers to tackle tax evasion

The Government has moved to boost the Revenue’s powers to tackle tax evaders and it is closing off loopholes used by companies, landlords and individuals to reduce their tax payments.

The new measures are included in the Finance Bill, published on Thursday morning, which gives legislative effect to Budget 2016. Although the Bill will not be enacted until the end of December, it includes specific additional Revenue powers taking effect today which will boost its capacity to secure information about taxayers from third parties and financial institutions.

Furthermore, the Bill provides scope to the Revenue to obtain more data on let property. Public offices and property managers will be requirede to return additional information to Revenue to help its profiling and targetting of non-compliant landlords.

Property agents will be required to include in a return of information to Revenue the tax reference number of each property owner and the local property tax number in respect of each residential property.

In addition, Government bodies paying rent or rent supplement will be required to include in the return of information the local property tax number in respect of each residential property.

The Bill also includes steps to clamp down on capital gains tax avoidance.

One measure will prevent a practice in which company owners put a “substantial amount of cash” into the company shortly before a sale of company shares so the shares derive their sale value mainly from cash holdings and not from land or buildings.

Another measure closes a loophole in which capital gains tax can be avoided on the sale of a business “in return for an undertaking not to compete with the new business owners.” A further measure is cast to prevent individual avoiding capital gains tax by transferring property to controlled companies abroad.

The Revenue already the right to seek information from third parties and financial institutions about known taxpayers.

However, such powers have now been expanded to include information about taxpaywer whose identity is not known “but who is capable of being identified by othermeans.”

The tax authority has also received powers to ask the High Court to direct that an order requiring third parties and financial institution to provide information about a taxpayer order is not made known to the taxpayer.

The Revenue’s power to obtain taxpayer information from various sources where foreign tax is at issue have also been expanded. “This means that the power to apply to the Appeal Commissioners for their consent to seek taxpayer information from a third party (where that third party name was provided by a financial institution) is now extended to cover foreign tax,” said the official memo which explains the Bill.

“This situation may arise where such information is sought from the Revenue Commissioners by a foreign tax authority under existing legal arrangements, for example, a double taxation agreement.”