Tom Parlon (Laois-Offaly, Progressive Democrats)

I am pleased to have the opportunity to address the Dáil on this matter.

I assure the House that the fact that some people have invested in life assurance investment products and have legitimately profited from such investment does not lead the Revenue Commissioners to assume they are engaged in tax evasion. The focus of the Revenue investigation is on the source of the money invested in insurance products and whether it was money that should have been, but was not, disclosed to the Revenue Commissioners. Ordinary taxpayers who invested money from sources such as redundancy payments, accident compensation funds, retirement lump sums or savings from moneys that were subjected to tax have no further obligations and need have no concerns about this investigation.

I am, however, informed by the Revenue Commissioners that following on from information gleaned from previous large scale investigation projects and other research, it was clear that some individuals had used life assurance investment products to hide taxable income, gains or acquisitions. The number of investors combined with the volume of funds invested suggested that the matter was best dealt with on a similar basis to that used for previous large scale projects such as the bogus non-resident account and the offshore account investigations. This involves a voluntary phase with time deadlines, during which individuals can come forward voluntarily and disclose outstanding liabilities, and a follow up investigation phase to identify those who do not come forward voluntarily. Those who come forward voluntarily will benefit from reduced penalties, their names will not be published in the quarterly defaulters lists and they will not be considered for prosecution, or even persecution. As with the previous investigations, this one is aimed at those who have not fully disclosed their income, gains or acquisitions in the past and who owe tax to the Exchequer. Those who have previously declared their incomes and paid their taxes are compliant taxpayers and are not required to do anything in connection with the investigation.

The Revenue Commission contacted all the relevant insurance companies and requested that they write to their investors where the investment was in aggregate greater than €20,000. It is understood that as a result many individuals have received letters from their insurance companies in recent weeks outlining the background to the Revenue investigation. The issuing of mail shots by insurance companies to investors is to be commended.

I welcome the opportunity to clarify a number of issues relating to the current investigation. First, the investigation applies only to those who invested in insurance products using money that should have been but was not disclosed to the Revenue Commissioners — money colloquially known as "hot money". Accordingly, most people do not have a tax problem since they would have funded their investment with redundancy payments, accident compensation, lump sums received from a pension fund on retirement, personal savings from moneys that were subjected to tax etc. These people are not affected by this investigation.

Second, I refer to a matter specifically mentioned in the matter raised by the Deputy, namely the growth in funds invested in the life assurance companies. While the moneys were with the insurance companies the funds in which they were invested were taxed and therefore the individual investor has no further liability to pay on those profits. The Revenue Commission is satisfied that the life assurance companies have correctly accounted for all tax due on the growth of the investment and accordingly it is only interested in any undisclosed funds invested.

Third, this investigation does not apply to anybody who fully rectified their tax affairs previously, for example under the 1993 amnesty or the recent Revenue investigations. In the current phase of this investigation, the Revenue Commission is concentrating on cases where the individual investment or the aggregate investments exceeded €20,000. Based on experience this is where it perceives the greatest risk to be and setting such a threshold enables it to manage this project effectively. Therefore, the deadlines set for making a qualifying disclosure, namely 23 May and 22 July, will not apply to investors whose investments in aggregate are €20,000 or below.

It is not the Revenue Commission's intention currently to initiate an investigation into cases below the €20,000 threshold. However, should new data emerge from the current phase which makes it necessary for it to rethink this approach, there would be a further opportunity for such cases to avail of the qualifying disclosure scheme outlined in the code of practice for revenue auditors and disclosure dates would be announced as appropriate.

Authorised Revenue officers will shortly carry out a sampling process in the insurance companies as provided for in this year's Finance Act. Preparatory work has already taken place and I am advised that full co-operation in this process is being received from all the insurance companies. Takeovers, mergers etc. are not posing any particular difficulty and records are generally available for the period covered by the investigation — 1980 and subsequent years. At a later stage the Revenue Commission will ask the High Court to make orders under which the insurance companies will be required to furnish particulars relating to investments and investors.

Any people in doubt as to whether the current scheme applies to them should consult their tax adviser or the Revenue help line at 01- 6474818. Notice of intention to make a disclosure must be sent to The Revenue Commissiom, 1 Clanwilliam Court, Mount Street, Dublin by 23 May. As always, any person whose tax affairs are not correct should take steps to rectify them at the earliest opportunity.

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