Medical consultants: Revenue trawl reveals high non-compliance

Some 30% of consultants found to have underestimated tax liability, finds C&AG

Revenue found a high-level of non-compliance in the tax affairs of medical consultants and since 2010 has initiated 763 medical consultant cases, the  Comptroller and Auditor General’s report said. File photograph: Getty Images

Revenue found a high-level of non-compliance in the tax affairs of medical consultants and since 2010 has initiated 763 medical consultant cases, the Comptroller and Auditor General’s report said. File photograph: Getty Images

 

A Revenue trawl of the tax affairs of medical consultants has yielded €48.7 million in unpaid tax, penalties and interest since 2010, according to the Comptroller and Auditor General’s (C&AG) report.

Revenue found a high-level of non-compliance and since 2010 has initiated 763 medical consultant cases, the report said.

The yield related to 235 consultants, which corresponds to more than 30 per cent of the consultants examined by the investigation.

The report notes that 29 cases resulted in significant payments to Revenue and were published in the Revenue’s quarterly list of tax defaulters.

In 2010, the Revenue became aware of a tax planning strategy used by medical consultants primarily in the Dublin region, the report said. The strategy involved the incorporation of a new company by the consultant and the transfer of his or her business to the company.

Revenue was concerned at the nature of the transactions between the consultant and the companies involved, and whether they reflected the commercial reality of the consultant’s work.

The C&AG’s report showed that 403 cases conducted as part of the review were closed while 360 remain ongoing. Some 249 of the 403 closed cases involved Dublin-based consultants, while the East and South East region accounted for only 25 cases.

Additional liability

Of the cases closed, 70 per cent resulted in the identification of additional liabilities, while the average settlement was approximately €173,000.

The report published details of two cases in which the consultants had wrongly accounted for fee income on their companies’ balance sheets, both of which resulted in “large cash payments” to Revenue.

In one instance, the consultant had recorded fee income of €2 million in the related company financial statements over a period of six years, albeit without setting up a bank account for the company and recording it as income in the profit and loss account with a corresponding debtor on the balance sheet.

As part of the negotiated settlement, it was agreed the consultant would be paid a significantly increased salary from the reported fee income which would be taxed at the relevant income tax rates.