The global crack down on tax evasion continues. In Ireland, a project by the Revenue Commissioner (the Revenue) uncovered that some third parties were not paying tax and expenses that were not work-related, said a recent article in the Irish Times.

But that was not all. The investigation brought to light how the companies were making tax deductions on pensions payments, which documents revealed were never made.

According to the Comptroller and Auditor General’s report (C&AG) when the taxpayers were contacted about the investigation into their tax evasion practices, their tax agents responded with “grossly inadequate or incomplete disclosures”, the Irish Times reported.

At the initial stages of the investigation the Revenue reached out to tax agents and representative groups to rectify the tax issues. However, the Revenue saw these practices as “deliberate tax evasion” and made it clear that companies who took responsibility for their actions and disclosed their tax debts may be able to dodge penalties but this move was later seen as a “mistake”.

“The team found that a number of agents submitted grossly inadequate or incomplete disclosures and slowly increased the amounts in the disclosures in the expectation of securing the lowest settlement,” the article said. 

About 435 agents represented the taxpayers where 5 represented roughly 30 percent of all the taxpayers who were responsible for paying tax.  In effect, penalties were imposed on more than 90 percent of the cases.

In wake of this investigation, the Revenue found that the level of non-compliance brought to light the contractor companies who deliberately cut the corners to avoid tax laws and the project revealed that there ‘s more clarity around the treatment of expenses. 

The report also highlighted that regulatory changes may be necessary to dealing with tax evasion by third parties. 

 

 

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