Though tax officials have only begun to scratch the surface of the variety of tax dodges, bogus non-resident accounts — the so-called “poor man’s Ansbacher” — are proving to be the most widespread and lucrative of them all.
The cash handed in so far by tax rogues in the various scams is huge — equivalent to the revenue that Finance Minister Charlie McCreevy could have earned by putting 70 cents on the pint or almost two euros on a packet of cigarettes in his budget.
On Tuesday, a 60-day deadline for disclosure and payment of any tax, interest and penalties by bogus account holders expired. A rush to pay by tax dodgers was expected as those that don’t put their hands up will face significant additional penalties and interest plus the possibility of criminal prosecution.
The cash the bogus accounts probe is bringing in is dwarfing other more high-profile investigations. So far, DIRT and other taxes on the bogus accounts have yielded almost euro 500 million.
Look-back audits of the financial institutions, following the Oireachtas Public Accounts DIRT inquiry, brought in euro 220 million. The Nov. 27, 2001 voluntary disclosure scheme resulted in euro 227 million being paid.
The latest phase has so far yielded a further euro 50 million even before the deadline expired.
Last year, 3,675 people owned up to 8,380 bogus accounts and paid up. The current trawl hopes to net about 13,500 more people.
Further letters demanding payment will be sent out by the tax team next month to more bogus account holders as a result of new bank and building society disclosures made on foot of High Court Orders.
But the DIRT inquiry indicated that there could have been as many as 50,000 bogus accounts in existence. So the probe so far may be just dealing with the tip of the iceberg.
The Revenue Commissioners office said that since it sent out enquiry letters in October, it has had “numerous” approaches. It warns it is firmly committed to fully investigating all cases that have not come forward by this week.
Those who opened bogus accounts in the 1970s and early ’80s face the prospect of horrific bills.
Tax accountant Frank Brennan pointed out in the Irish Times that total tax rates hit a high of 77 percent in the 1970s and the interest bill since could be as high 350 percent. But there are also penalties on top.
He said someone hiding the equivalent of euro 25,000 in hot money about 25 years ago could face a tax hit now that has leveraged up to euro 125,000.
Beside the DIRT and bogus accounts scandal, the yield from some of the tax dodging scams involving the super-rich stashing their money offshore in exotic tropical locations is much smaller so far, according to new Revenue figures.
The Ansbacher scam in the Cayman Islands and other offshore dodges have so far brought in almost euro 21 million in payments on account to stop the interest clock ticking.
Payments have been made in 59 of 289 cases uncovered so far. Nearly 700 individuals, trusts and companies are involved.
In the Clerical Medical Insurance-National Irish Bank probe, 430 cases are involved. Five are being investigated for prosecution and two are before the courts.
So far, 355 cases have been settled with payments totaling almost euro 36 million. In the 75 other cases, almost euro 7 million has been paid on account.
As a result of the Flood tribunal into planning corruption, 62 cases are under investigation and a further 41 are being prepared for investigation.
Almost euro 17 million has been paid on account by a number of the Flood cases under investigation.
The tax implications of disclosures at the Moriarty tribunal are also being closely scrutinized by tax enforcement officials.