Brian Cowen (Laois-Offaly, Fianna Fail)

I propose to take Questions Nos. 79 and 80 together.

I am informed by the Revenue Commissioners that they fully recognise the tax compliance risks that arise in the construction industry and have carried out an extensive programme of checks, audits and investigations in the construction industry in 2005.

The Revenue Commissioners have reorganised along regional lines with each revenue region containing a special compliance district specifically set up to combat evasion. During 2005, both mainstream revenue auditors and special compliance staff have carried out substantial investigations of tax evasion in the construction industry. The extent of these activities is evident from the following brief summary.

Revenue's east and south east region devoted 50% of its available audit resources to a special investigation of the construction industry. In the first half of the year, the region completed almost 500 audits of principal and subcontractors yielding approximately €12 million so far. The region carried out a further 360 compliance checks, 37 site visits and 92 visits to subcontractors newly issued with C2 certificates. By the end of the year, this region alone will have completed over 1,000 construction audits, 800 compliance checks and 70 site visits.

Similar activity is taking place throughout the country. The Dublin region's special compliance staff carried out 35 site visits and 1,650 compliance checks in the first six months of this year. Dublin also has a Revenue district dedicated specifically to dealing with high-risk construction industry cases. That district alone completed 80 audits so far this year with a yield of €4.5 million in tax, interest and penalties. The Dublin region has undertaken intensive investigation of a number of high risk cases, and has developed a national relevant contracts tax monitoring group which tracks the activities of high-risk principal and subcontractors by working closely with every revenue district in the country.

In the other Dublin Revenue districts a high level of construction industry related activity has also taken place in 2005. For example, one district alone,out of a total of six districts, has completed approximately 300 relevant contracts tax field audits in the first half of 2005.

That story is replicated in Revenue's other regions. The south west region has undertaken an extensive programme of RCT audits and checks, and has also had an in-depth look at a range of infrastructure building projects. The Border, midlands and west region has conducted a wide-ranging programme of activity in the first half of the year. For example, its special compliance district completed nearly 70 site visits affecting 250 contractors, as well as over 130 covert surveillance operations aimed at gathering intelligence on possible evasion.

The Revenue Commissioners are now planning how to build on these activities in 2006. The construction industry will form a major part of Revenue's compliance and audit work in 2006. That work will take into account a risk analysis of the sector, which has been conducted recently. The introduction of a computer risk assessment system during 2006, covering all businesses, will help target further the Revenue Commissioners' anti-evasion work. This system will enable them to capitalise on the knowledge already gleaned on this sector.

The Government provided the Revenue Commissioners with additional resources, including 400 staff in the audit and compliance area some few years ago. The Revenue Commissioners are taking steps to police the construction sector within their existing staffing complement by appropriate deployment of resources, effective real time initiatives on the ground and innovative exploitation of technology to assess and contain risk. If the Revenue Commissioners come to the conclusion that additional resources would be of practical benefit, whether in the form of staff or otherwise, they will make a case to me and I will assess it on its merits and respond appropriately.

I am confident, therefore, that the Revenue Commissioners are alert to the emergence of new or increasing tax risks in the construction industry and that their 2006 audit and compliance work will focus on the sector.

See this speech in context