Ansbacher names face hefty bills in back tax and penalties

Ansbacher account holders could owe as much as £3.8 million (€4.8 million) for every £1 million deposited in the notorious accounts, tax experts have said.

This amount comprises back-tax, interest and penalties owing if the money had not been declared for tax purposes.

On top of this, the Revenue may be able to prosecute some of the offenders for a Revenue offence, with the possibility of a fine of £100,000 and/or imprisonment for up to five years. It can do this for offences committed over the past 10 years.

For offences committed prior to this, it can use common law and the charge of conspiracy to defraud the Revenue. Under this there is no time limit.

Looking at the grounds for prosecution for a Revenue offence, one is knowingly or willingly delivering an incorrect statement or return, or assisting or abetting someone in making an incorrect statement or return.

The key to this is, of course, the "knowingly and willingly", which is generally thought of as a necessitating a very high burden of proof.

However, observers say the detail likely to be available to the Revenue from the Tanaiste's enquiries may make this course of action feasible in some cases.

On summary conviction, the penalty is £1,000, which can be mitigated to £250.

However, if the case is taken to a jury, which is the most likely outcome, the penalty on indictment is up to £100,000 and/or a five year jail term.

Prosecutions may also be possible in some cases for breaches of exchange control rules. On conviction, the fine can be up to £5,000, with a possible jail term of up to two years.

The High Court-appointed inspectors are also likely to investigate possible breaches of company law, where prosecution can involve a range of different penalties, depending on the offence.

Apart from the prosecution route - where the court would rule on the penalties, both financial and otherwise - the Revenue can also decide to seek a negotiated settlement. A committee of Revenue officials decides which is the appropriate route in each case. In the case of Ansbacher, pressure will be on to prosecute at least some of the depositors.

In the case of negotiations, the Revenue and the taxpayer sometimes agree on an amount. In cases where the taxpayer does not agree, he or she has the right of appeal, first to an internal panel and then to the independent Appeals Commissioner.

This is where the Revenue's case against former Taoiseach Mr Charles Haughey is now stalled, with the Revenue likely to appeal the assessment of the commissioner who reduced Mr Haughey's bill to zero.

If you assume that an account holder held £1 million in the Ansbacher accounts in the early 1980s and it was undisclosed taxable proceeds it would be liable to income tax at the then top rate of 65 per cent.

As a result, the liability would be around £2.5 million by now. On top of that, the penalty is likely to be some £1.3 million or three times the tax owed.

As a result the total undisclosed liability would be £3.8 million. An indictment would add another £100,000 to that.

On top of this, any who availed of the 1987 or the 1993 tax amnesties without declaring their Ansbacher accounts could forfeit all the breaks they received during either amnesty.

That amount could also be significant, while the 1993 amnesty terms would also allow prosecution to be pursued against those who only made a partial declaration.