Written answers

Wednesday, 7 March 2012

6:00 pm

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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Question 35: To ask the Minister for Finance his policy on tackling the hidden economy; and if he will make a statement on the matter. [13168/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that their tax compliance programmes are under constant review to ensure that they are focussed on the areas of greatest risk, including risks from the shadow/hidden economy. Revenue tackles the problem of the shadow/hidden economy through its range of compliance and audit interventions including through targeted special projects. Case interventions are undertaken based on Revenue's assessment of compliance risks, the level of those risks and other relevant information available.

Revenue is using a wide range of methodologies to identify those operating in the shadow/hidden economy and is deploying the full range of compliance interventions. Activities can include covert surveillance, cold calls to businesses and venues as well as pre-arranged aspect queries on specific items. There is no doubt that shadow/hidden economy activity creates distortions in the economy and competitive disadvantages for compliant businesses. For these reasons, Revenue focuses on deterring shadow/hidden economy activity and non-compliance through its audit and investigation programmes based on risk analysis, use of Revenue powers and their intelligence and information systems. Last year Revenue carried out 11,066 audits resulting in a yield of €440.46 million.

I am further advised by the Revenue Commissioners that their approach to the shadow economy is underpinned by close consultation and cooperation with the Department of Social Protection. The primary objective of these activities is to uncover either non-declaration or under-declaration of income and/or fraudulent DSP claims. The Deputy will be aware of the continuing strengthening of legislation to provide for a robust framework within which the Revenue Commissioners may tackle tax and duty evasion. Finance Bill 2012, currently before the Oireachtas, contains provisions in relation to:

* The making of returns of transactions by merchant acquirers, and other payment settlement entities, to the Revenue Commissioners (from 2010);

* The more effective investigation of white-collar crime.

The Bill also contains a comprehensive package of measures in relation to Excise (Oils) including, requirement for separate licences for auto-fuel traders and marked fuel traders, requirement to have a separate licence for every premises or place at which the fuel concerned is dealt in, and a requirement that a licence must be clearly displayed at the premises or place.

Regulations were also introduced in 2011 providing for the supply of details to the Revenue Commissioners of payments made by Government Departments and State Bodies. I am advised by the Revenue Commissioners that this data is matched to the Revenue records of the various recipients, and is used to profile risk. Similar matching is also carried out using other third party data received by the Revenue Commissioners. Revenue has a prioritised focus on those sectors that traditionally have been susceptible to shadow activity such as cash businesses.

I am advised by the Revenue Commissioners that, in order to inform the approaches they are taking and help determine where resources may best be deployed, they have engaged on a series of meetings with trade and representative bodies. Increasingly they are finding that bodies and individuals are prepared to share insights and specific information with Revenue with regard to shadow economy activity in times of recession. Revenue is deepening their engagement with the representative bodies and has set up regional shadow economy liaison groups.

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