Paudge Connolly (Cavan-Monaghan, Independent)
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Question 44: To ask the Minister for Finance if the practices of life insurance companies will be subjected to the same degree of investigation by the Revenue Commissioners as the policyholders who are being targeted; and if he will make a statement on the matter. [13468/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that the current focus of their investigation is into undisclosed taxable sums invested in life assurance products and, in the first phase, to encourage as many taxpayers as possible to avail of the voluntary disclosure scheme which was announced on 11 April 2005. Following the voluntary phase of the investigation, Revenue will take steps to identify those who do not come forward and will actively pursue those who have outstanding liabilities. While the focus of this disclosure scheme is on individual taxpayers, if any evidence emerges that suggests that life assurance companies had any role in encouraging tax evasion, the issue will be fully investigated.

Paudge Connolly (Cavan-Monaghan, Independent)
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Regarding what is referred to as "hot money", does the Minister agree that the life assurance companies should be targeted to a greater degree than the policyholders? Does he agree that the corporate executives who designed the insurance scams should be examined and made to answer to the Revenue? It was an industry-wide product which was not dreamt up by one company. The financial institutions believed they were above the law in trying to get people to hide money. Why should we pursue the policyholder? Is it not the service provider which should be pursued? The consumer and policyholder could be seen as a soft touch in that they are easy to identify. It is important to point out that the Sale of Goods and Supply of Services Act 1980 existed at the time and was not used by the Revenue to target the providers of such services.

Does the Minister agree that we are targeting the wrong people? The companies are in breach of regulation and we should pursue them. They colluded in this activity. Does the Minister agree that the State has a responsibility to ensure that natural justice applies in this case, which means going after the companies that designed these plans? Does the Minister agree that commission-based agents were tasked to trawl communities and target hot money?

Brian Cowen (Laois-Offaly, Fianna Fail)
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In the Finance Act 2005 we widened the Revenue powers regarding aiding and abetting offences which seeks to deal with the situation the Deputy has outlined should there be a requirement to do so. Rather than the assertions made by the Deputy, should evidence be found to that effect, the Revenue Commissioners now have powers which they previously lacked to deal with those matters. The Government has proactively made decisions on the matter. The Revenue Commissioners advise me that authorised Revenue officers are empowered to make an application to a judge of the High Court seeking an order requiring insurance companies to supply names, addresses and other relevant information concerning policy holders who used life assurance products to hide funds that should have been disclosed for tax purposes. If the funds were related to taxable income that should have been disclosed, the individual taxpayer was responsible for the disclosure and it is an offence under our tax law not to disclose. It has come to Revenue's attention that there is sufficient de facto evidence to suggest that these products were used to evade tax. I also emphasise the need for people to avail of the voluntary disclosure scheme. This was introduced by Revenue to enable those who voluntarily disclose their position to avoid an imposition of penalties and interest in addition to whatever liability may be due. As I have already stated, the focus of the Revenue Commissioner's investigation is on individuals who used insurance products to evade tax. There is no evidence that insurance companies engaged in tax evasion.

Paudge Connolly (Cavan-Monaghan, Independent)
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Does the Minister agree that when reputable companies put a product on sale, the ordinary consumer will think the product is all right? In most cases, a consumer will not think he or she is avoiding tax because his or her agent states that this is how the system works, this is how one invests money and if one wishes, this is how one avoids being caught. It sounds as though these companies will get off scot free, whereas the Revenue should have tackled them 20 years ago.

Finian McGrath (Dublin North Central, Independent)
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Hear, hear.

Brian Cowen (Laois-Offaly, Fianna Fail)
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This matter has only come to Revenue's attention in recent times.

Paudge Connolly (Cavan-Monaghan, Independent)
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It has been happening for 20 years.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Revenue Commissioners have very successfully dealt with some legacy issues going back many years encompassing a sum of almost €1.7 billion. This particular issue has now come to their attention. I again emphasise that individual taxpayers are personally responsible. If one has undisclosed taxable income, one is personally responsible for it. I have also pointed out that unlike previously, we have broadened the ambit of the Revenue Commissioners' powers to ensure that anyone who aided and abetted individuals to engage in tax evasion practices will be subject to prosecution.

In the past, the Revenue Commissioners found it difficult to prosecute because of the interpretation of their legal powers. As a result of enactments in this year's Finance Act, the Revenue Commissioners now have the necessary powers to follow up on these issues in a way that was not previously possible as far as both individuals and — should evidence emerge — the companies are concerned. I emphasise that at present, no such evidence is available to the Revenue Commissioners.

Paudge Connolly (Cavan-Monaghan, Independent)
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The Minister is asking the companies who devised the scam——

Séamus Pattison (Carlow-Kilkenny, Labour)
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The Deputy should be very brief.

Paudge Connolly (Cavan-Monaghan, Independent)
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——to now sell those individuals back to the tax authorities. The Minister is targeting sitting ducks. He is asking companies who devised the scam——

Brian Cowen (Laois-Offaly, Fianna Fail)
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One person's sitting duck is another person's tax evader.

Paudge Connolly (Cavan-Monaghan, Independent)
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The companies devised the scams.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy can have the answer, unless he wants to continue talking.

Paudge Connolly (Cavan-Monaghan, Independent)
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I would like to understand the answer.

Finian McGrath (Dublin North Central, Independent)
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The Minister is doing a great deal of talking.

Séamus Pattison (Carlow-Kilkenny, Labour)
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Order, please.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Revenue Commissioners advise me that in line with best practice elsewhere, they increasingly apply a risk focus to their operational activities. In this instance, their research indicates that the tax risk is largely related to the higher value policies. As a result, their initial focus is on investments which in aggregate exceed €20,000. The people who had small amounts to whom the Deputy referred will not be the focus of this investigation, at least in the first instance.