Ms Josephine Feehily:

There are a couple of issues regarding whether we are more or less susceptible. The market here is quite small with regard to goods, which is where the risk principally lies. The United Kingdom has a huge market. It had some very significant cases in respect of mobile phones and computer chips, which are well documented and which we have studied. It had serious practical experience on which to build an estimate. In the course of those cases it appeared that, to the extent that Ireland was a risk, it was a risk as a conduit country rather than a country that was actually suffering a VAT loss. One of the reasons we have not attempted to measure the gap is that we have not attempted nationally to measure the VAT gap ourselves. Measuring a gap is an extremely labour intensive business and there is no agreed single way to do it. We recognised that the European Union was measuring the gap and that if it was measuring 25 countries, it seemed sensible to let it do the measuring on a consistent basis. That is the national VAT gap. It did this in 2006 or 2007 and published the results a couple of years ago. The Irish VAT gap at that point was small. The figure was so low that, frankly, we do not trust the methodology. It was too low and the European Union is repeating the exercise at present. We have tended to take the view that if somebody is engaged in gap analysis across the European Union, we should give them the data and let them do it.

With regard to the risk here, we have recently started a national project in the plant and machinery sector.