A £1 million recording system is to be introduced by the Revenue Commissioners to its stamp duty offices. The move follows the disclosure that about 20 solicitors' firms had been defrauded of an estimated £1.5 million by a legal agent working for them.
The new verification system, which is currently being evaluated, will record an audit trail from the stamp duty office to the Land Registry, where documents must be registered to establish title. The need for such a system was underscored by the discovery by a Land Registry official last March that an apparent Revenue Commissioners' stamp on a document was a counterfeit. When the Garda Bureau of Fraud Investigation was called in, it emerged that a legal agent was duping his solicitor clients into believing that about £1.5 million had been paid in stamp duty.
The Comptroller's report states that up to now "the uniqueness and security of the stamping process, coupled with the design and security of source of the stamping dyes" had been relied on as proof that duty was paid. A visual inspection of the stamp by Land Registry staff is the only proof that the duty has been paid, but, as an interim measure, an ultraviolet light test is being introduced for the latest stamps.
A spokeswoman for the Revenue Commissioners said the traditional system had worked well but "has become vulnerable because of technology". No record was kept of most documents presented for stamping over the counter in the Stamp Duty public office. After a tendering process for the new electronic system is complete, a request will be made to the Department of Finance for the necessary computer capital funding.
In what is the only discovered fraud of its kind, the legal agent was either forging the stamp with sophisticated equipment, and presenting it at the Land Registry, or not bothering to present it at all. Up to 20 solicitors' firms were victims and more than 50 house buyers were left in a legal limbo because the registrations recorded at the Land Registry were invalid. The Revenue spokeswoman said the question of title for the purchasers was still under discussion.
A spokesman for the Land Registry, which has records going back more than 100 years, said the case last March was the first of its kind to come to his notice.
The auditor's report says the fraud "apparently involved the forging of stamps by the use of a colour photocopier".
When the legal agent's premises were raided by the Garda Bureau of Fraud Investigation in April, stamps with face values of between £1,000 and £10,000 were seized, along with photocopying, laser-printing and scanning equipment. A file is expected to be sent to the DPP. The Auditor General says that late last year the risk of relying on a visual examination alone, "particularly where sophisticated forged stamps might have been used", was pointed out by his staff. However, the Revenue was aware of the same problem since 1995 when an internal audit recommended "the need for an audit trail".