issue of Tax evasion in Ireland and around the world has significantly increased in the last few years. The downturn in the Irish economy along with pressures from some of our major international trading partners(European Union, International Monetary board and US) has increased the pressure on the Irish government to strengthen its revenue arm and try and recover millions of euro that it has lost through tax evasion and corruption. The loss of this revenue to the exchequer has serious affects on the Irish economy and limits the money that could be spend on education, infrastructure, public health and Social Welfare to name a few.
Tax avoidance and tax evasion often get confused with one another and are often considered to mean the same. Tax avoidance is defined as the lawful minimization of tax liability through sound financial planning techniques such as phasing the sale of assets over a period long enough to effect maximum exemption from capital gains tax while tax evasion is defined as the unlawful attempt to minimize tax liability through fraudulent techniques to circumvent or frustrate tax laws, such as deliberate under-statement of taxable income or wilful non-payment of due taxes . While Tax avoidance is legal, tax evasion is an offense and is punishable by both civil and criminal penalties.
“The public’s attitude to tax evasion has also changed and so too has the attitude of the courts. It is no longer enough to admit a serious revenue offence and simply refund the exchequer. The prosecution of tax evasion will now almost certainly be met with the imposition of a jail sentence” . And in March this year, Paul Murray pleaded guilty to an elaborate welfare fraud over a period of 6 years and was sentenced by the circuit criminal court to 12 and a half year’s imprisonment reduced to 9 years on appeal. This case brought to light the change in judicial attitude of tax evasion to the public’s attention. Many other individuals have followed in Paul Murrays steps and have been jailed for other tax evasion offences which we will look at in more detail later on.
The primary objective of a revenue audit is to promote voluntary compliance with tax and duty obligations .Revenue investigations usually occur when revenue have strong concerns that tax offences have occurred. Where strong indications of serious tax evasion are known in relation to a customer, the case will not normally be the subject of a Revenue audit but rather the subject of a Revenue investigation . Revenue investigations usually lead to criminal prosecution or substantial penalties. Without revenue audits tax evasion would go by unrecognised costing the government millions if not billions in lost tax. Revenue has invested in three main projects that are investigating tax evasion in Ireland at the moment and they are single insurance premium policies, offshore accounts and bogus non-resident accountants.