Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank the Senator. The section inserts a new section, section 108(C), into the VAT Consolidation Act 2010 which, as she correctly said, deals with joint and several liability for tax. The new power and section are an anti-fraud mechanism. They will allow the Revenue Commissioners to hold a person jointly and severally liable for VAT which has not been remitted to it where the person knowingly or recklessly participates in transactions connected to the fraudulent evasion of VAT. The section applies to taxable supplies of goods or services and also to the intra-community acquisition of goods. It provides that anyone made jointly and severally liable will be liable for the net amount of VAT due. A person made jointly and severally liable under this section will also be liable to pay interest on the outstanding amount of the tax, but will not be subject to penalties.

It is possible to assign joint and several liability for the unpaid tax to more than one accountable person where there are participants in a chain of transactions involving the same supplies. Legitimate businesses which practise good corporate governance have nothing to fear from this provision. VAT fraud is an abuse of the VAT system which ultimately results in the fraudulent extraction of VAT from the Exchequer and can involve any type of goods or services. The Revenue Commissioners has uncovered a number of instances of VAT fraud and as a result issued a notice in July 2014 to raise traders' awareness of the risks and consequences of participating in transactions connected to a VAT fraud. The notice provided guidelines to help traders protect themselves from becoming involved in VAT fraud and outlined the possible consequences. These include the imposition of an additional VAT liability on intra-community supplies, the imposition of penalties and the loss of the right to an input credit on their purchases.

Powers to address VAT evasion are vital to assist legitimate businesses which have to compete with less scrupulous businesses. It is expected that this provision will act as a deterrent to participation in fraud. Such powers should improve compliance, optimise the tax pay to the Exchequer and also encourage people to be prudent in how they conduct their business. In terms of the rationale behind the section, it is an anti-fraud measure which has been sought by Revenue and it is prudent to insert it in the Bill.