£60m tax still owed from 1990 to 1997, report says

Almost £60 million in taxes was owed by self-employed and professional people over the seven years from 1990, and most of it …

Almost £60 million in taxes was owed by self-employed and professional people over the seven years from 1990, and most of it has never been paid, the Comptroller and Auditor General, the public sector watchdog, has reported.

The CAG's report said many of the group had never even filed a tax return.

The report also disclosed one of the largest income tax settlements in the history of the State, when one unnamed individual settled a debt of £6.6 million with the Revenue last year. The identity of this taxpayer was not revealed in the Revenue's published list of such settlements, apparently because the person made full disclosure.

The report disclosed that of the approximately 1,249 mainly professional and self-employed people who had judgments registered against them between 1990 and 1997, only 10 per cent had paid a satisfactory level of arrears.

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In an overall analysis of Revenue procedures, the Comptroller and Auditor General, Mr. John Purcell, identified several reasons for the low level of recovery in which he said the Revenue "compromised on legally enforceable debts".

He said that when Revenue solicitors searched for the property assets of the people with arrears, the family home was the only asset discovered. It was Revenue policy not to force the sale of a family home to recover tax debts.

However, he pointed out that in some cases, other properties were identified as owned by somebody of the same name as the tax defaulter, "but no other checks were conducted to establish if he/she was the owner". While the policy of the Revenue had never been to force the sale of the family home, it has also "never proceeded to a forced sale", even in the case where a judgment was registered against a non-family home property.

The large level of uncollected tax arrears was revealed during an audit of judgment mortgages - where the Revenue takes control of taxpayers' property until outstanding taxes are paid - registered against individuals.

Mr. Purcell queried the "adequacy" of the process of collecting tax arrears from those who have had judgments registered against their property. He said in certain cases the Revenue reduced tax liabilities to agree with totals already paid. On other occasions "there was no payment and the tax assessments for all years in arrears were reduced to nil".

An accounting officer on behalf of the Revenue said the "processof instructing solicitors and managing cases through the courts" made it difficult to work on more recent liabilities, but also was "not fully effective in collecting tax arrears".

Despite the increasing use of sheriffs to collect tax, "the amount of liability (especially estimated liability) which had accrued was too large for any rapid inroads to be made", said the officer.

The officer also said that when a judgment mortgage was registered, the taxpayer often made no response, but when they submitted a return, it was not surprising it was for smaller amounts than the Revenue estimated.

He said this was also explained by the fact that the practice in the early 1990s and further back was "to overestimate the liability in order to elicit a response".

The officer added: "In some cases it has emerged that trade ceased earlier than our records show, so that the liability for some tax periods is actually nil."

In relation to the £6.6 million settlement made last year by the unnamed individual, a Revenue spokesman said their name was not published in Iris Oifigiuil, because they had made "a full and voluntary disclosure" of their tax liability.

If someone does not do this and their liability exceeds £10,000, their name is published, he added.

Elsewhere, the report shows the amount of outstanding tax continuing to fall - it stood at £1,167 million at the end of May 1999. The Revenue estimates that £541 million of this is likely to be collected. The number of audits instigated by the Revenue was down from 18,762 to 18,195. The Revenue brought six cases to court last year for tax evasion.

Fines were imposed in five cases and, in the sixth, a company director received a six-month suspended prison sentence.

The report also deals with "apparent and serious deficiencies in the Disability Council's financial management and its credibility". The Department of Justice provides funding to the organisation.