Revenue offers disclosure of trusts assets ahead of inquiry

PERSONS WHO have tax liabilities associated with assets or money in Irish or offshore trusts have been given until September to make a voluntary disclosure to the Revenue Commissioners prior to the commencement of a targeted investigation into such structures.

The inquiry will focus on persons with substantial income and wealth who have gone to special efforts to evade tax. It may also have consequences for wealthy persons who have used trusts and other structures to avoid tax.

Under a new law that came into effect on Christmas Eve last, accountants, bankers, solicitors, tax advisers and other third parties who have put money into offshore trusts or related entities on behalf of clients during the past five years, are obliged to disclose this information to the Revenue by next September.

Because of this, the Revenue expects by next September to be in possession of a large amount of new information governing existing offshore trusts set up by persons who are ordinarily resident in the State.

Yesterday it announced that persons with tax liabilities associated with Irish and offshore trusts, and such related entities as foundations, establishments or trust enterprises, may avail of qualifying disclosure terms in the period between now and September 1st.

In return for coming forward, people can benefit from reduced penalties, their names not being published in Oiris Oifigiúil, and being exempt from the possibility of being prosecuted.

After that date passes, it will be too late to make a voluntary disclosure.

Persons who have come forward under earlier voluntary disclosure schemes but who didn’t disclose liabilities associated with trusts, will not be able to avail of the new scheme.

The head of the Revenue’s investigation and prosecution division, Denis Graham, said it was impossible to estimate how much unpaid tax might be at issue.

“While it is not possible to put a figure on the amount of tax evaded using these structures at this stage, given that this type of evasion is well hidden, Revenue suspects from cases which have come to light from following the money trail in the course of other investigations, that the amount of tax at risk in some cases could be substantial.

“The use of such structures is one of the last ‘hiding places’ for tax evaders but armed with this new legislation, Revenue is determined to tackle this evasion forcibly,” he said.

The Revenue believes that the use of offshore trusts in itself establishes the existence of what it calls a “tax risk”, or a reason to make particular inquiries.

The law introduced in December as part of the Finance Act obliges third parties who have facilitated payments into offshore trusts in the past five years to disclose such acts to the Revenue.

It also granted a new power to the Revenue to oblige particular third parties, if requested, to disclose payments into all trusts, onshore or offshore, without time limit.

Denis Holligan, principal officer with the investigations division, said many offshore trusts “collapse” on the basis that real control continued to rest with the person who established the trust, rather than with the trustees who nominally had control over the trust assets.