Revenue have informed the ICAI, through the auspices of its CCAB-I representation at TALC, that another round of investigations into Single Premium Insurance Policies (SPIPs) is underway. This investigation will focus on single premium investments of €20,000 upwards from undeclared profits or gains.

Revenue is in the process of seeking High Court Orders to compel various Irish Financial Institutions to provide information on policyholders who invested sums between €20,000 and €50,000 in single premium policies in the period 1 January 1990 to 31 December 2003. The majority of the applications for the orders will be lodged by July with the residue of the applications being taken in the early Autumn.

Background

In April 2005 Revenue announced an investigation into the use by taxpayers of certain types of insurance investments for hiding undeclared profits or gains. In advance of the formal investigation, taxpayers were given the opportunity to come forward voluntarily and provide calculations of outstanding liabilities and pay the relevant amounts. This phase resulted in about 5,150 taxpayers coming forward and making payments of around €415 million.

The next phase involved Revenue requesting High Court Orders which forced financial institutions to pass on details of customers who invested in single premium of over €50,000 in the period 1 January 1990 to 31 December 2003.

Arising from information obtained under High Court Orders, Revenue issued enquiry letters in March 2007. Policyholders with outstanding tax liabilities were given a deadline of 30 May 2007 to come forward with a disclosure and payment of undeclared taxes, interest and penalties. This phase of the SPIP enquiry yielded €30 million in 2007.

Current investigation of Premiums of €20,000 to €50,000

The recently announced round of investigation will effectively go back over the tax years 1 January 1990 to 31 December 2003 with a view to catching undeclared tax arising on premiums which fell outside the terms of the 2007 enquiry, on premiums of €20,000 or more. Of course, the information to be provided by the insurance companies will in the majority of cases relate to compliant taxpayers with no outstanding tax liabilities. Similar to the previous phase, Revenue will request the insurance companies to include a declaration form for compliant taxpayers to complete and return to Revenue. The completion of a declaration should remove the compliant taxpayers’ details from follow up enquires by Revenue.

The ICAI will be working with Revenue on the wording of the declaration forms and follow up letters to taxpayers to ensure that there is minimal confusion and distress caused to the compliant majority affected by this new phase of investigation.