Voluntary Disclosure Initiative - Deposit Interest Reporting

Introduction

In May, Revenue announced a voluntary disclosure initiative for persons holding untaxed funds in domestic deposit accounts. Regulations were signed by Revenue in early May requiring financial institutions to provide details of interest paid to deposit holders where the interest paid exceeded €635. The regulations provided that the reports are to be made to Revenue on or before 15 September 2008 for payments made in 2005 or 2006. For payments made in 2007, the reporting deadline date is on or before 31 October 2008.

With effect from 15 September 2008, Revenue will have information on certain interest payments made by financial institutions where the interest payment exceeded €635.

It is not considered appropriate that persons who will be reported could avail of the benefits of a qualifying disclosure from such an intervention. Accordingly, after 15 September 2008, certain persons are precluded from obtaining the benefits of a qualifying disclosure.

Terms and Conditions of the Voluntary Disclosure Initiative

Persons who have undeclared tax liabilities in relation to accounts, now subject to the reporting regulations, which in aggregate held €100,000 or more at any time during the years 2005, 2006 and 2007, and who fail to avail of this disclosure initiative are precluded from making a qualifying disclosure if:

• A Notice of Intention is not submitted on or before 15 September 2008 and
• A full payment and disclosure is not made on or before 15 January 2009

The following persons are not eligible to make a voluntary disclosure under this initiative:

• Persons previously required to make a disclosure under the BNR, Offshore or SPIP project and who failed to make a complete disclosure,
• Ansbacher and CMI/NIB cases and
• Persons who have come or may come under the investigations arising from the Moriarty or Mahon Tribunals.

Benefits of Voluntary Disclosure

Where a notice of intention is submitted on or before 15 September 2008 and a full and complete disclosure and payment is submitted on or before 15 January 2009, the following benefits will apply:

• The disclosure will be regarded for the purposes of Section 1086 of the Taxes Consolidation Act, 1997, as a voluntary disclosure - this means that the identity of the person involved and details of the payment to Revenue will not be published,
• Revenue will not take steps to initiate the prosecution of any offence that may have been committed and
• Penalties will be mitigated in accordance with the Code of Practice for Revenue Auditors.

Scope of Revenue Enquiries

With effect from 15 September 2008, Revenue will commence to assess and analyse the information received. The primary concern for Revenue will be the capital funds in the accounts. Practitioners will be aware that, from 1993/94, DIRT became a final liability tax. Therefore, irrespective of whether a person was taxed at the standard rate or higher rate no further tax is owing where DIRT was applied to the interest payment for the years 1993/94 et seq.

Calculation Issues

Practitioners should also note that Revenue has designated 1997/98 as the roll-up year. For income tax, therefore, the liability for all years up to and including 1997/98 may be calculated on the basis that the aggregate undisclosed income of all years preceding 1997/98 was income chargeable for 1997/98 and not any other year. Similarly, for VAT the liability for all taxable periods up to and including January/February 1998 may be treated on the basis that the total undisclosed taxable supplies for all periods preceding January /February 1998 arise in that January/February 1998 period and not in any other period.

Where tax is owing for periods prior to 1991, Revenue is statute barred from mitigating penalties for these periods. In such cases, the undeclared income for these periods may be taxed by reference to the rates pertaining in 1997/98 but a 100% penalty applies.

In order to assist practitioners in the calculation of liabilities owing, interactive spreadsheets are available on the Revenue website.

Further information

An explanatory note with further information (together with detailed FAQs) are available on the Revenue website. Notice of intention forms and disclosure forms (form IRP1) are on the website, may be obtained from any Revenue office or from the Revenue Forms & leaflets Service by telephoning LoCall 1890 306706. This service is available 24 hours a day, 7 days a week.

A Revenue helpline is also available at 01-6474818 Monday to Friday 08.30 am to 4.30 pm. Enquiries may also be addressed to:

Office of the Revenue Commissioners,
Investigations & Prosecutions Division,
Underlying Tax Project (Interest Reporting),
4th Floor,
1 Clanwilliam Court
Lower Mount St,
Dublin 2

e-mail: utproject@revenue.ie
Fax number: 01 - 6474821