Brian Walsh (Galway West, Fine Gael)
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Question 164: To ask the Minister for Finance his views on the proliferation of the practice of so called phoenix businesses, whereby a company enters liquidation and quickly resumes business under the auspices of a new company in order to avoid debts; if he can quantify the amount of revenue lost as a result of this practice; and if he will make a statement on the matter. [23683/12]

Michael Noonan (Limerick City, Fine Gael)
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It is important at the outset to recognise that businesses do fail, and that it is a normal part of business and entrepreneurship. That said, tax compliance is vital in delivering to the Exchequer the tax revenues properly due to the State in a cost effective and efficient fashion and in ensuring a level playing field for businesses generally. Maximising the levels of timely voluntary compliance and providing an appropriate response to late or non-compliance is the responsibility of the Revenue Commissioners. Revenue draws a clear distinction between genuine inability to pay and deliberate and calculated non-payment and non-compliance. With regard to phoenix type activity, i.e. contrived non-compliance, the apparent cessation of a business and its re-emergence in another guise where there has been significant tax default, I am advised by Revenue that they have a targeted, risk- focussed approach to the early identification of phoenix entities and to the intensive deployment of enforcement measures quickly and effectively where non-compliance arises. There are close to 700 businesses currently actively monitored as part of Revenue's phoenix programme.

In Section 126 of the Finance Act 2012, I provided further protection for the Exchequer in high-risk situations, such as in phoenix cases, where the payment of fiduciary taxes is at risk. The section provides for security to be given to the Collector-General in specific high-risk cases and is a significant deterrent to the potential for the abuse of limited liability and non-payment of tax.

I am satisfied that the priority given by Revenue to limiting the capacity of phoenix entities to accumulate tax debts is effective and that the additional powers provided in Finance Act 2012 are a significant development in the task of dealing with the phoenix syndrome.

In relation to companies that go into liquidation, the Deputy will be aware that there is a legal requirement on a liquidator under section 56 of the Company Law Enforcement Act 2001 to report on the conduct of company directors to the Director of Corporate Enforcement within six months of his appointment. Unless relieved by the Director of the obligation to make the application, the liquidator will subsequently apply to the High Court for a section150 order under the Companies Act 1990 to restrict the activities of such directors. There are also further remedies available to liquidators under company law in cases where directors are found to have behaved dishonestly or fraudulently. These include possible actions to have directors disqualified or made personally liable for some or all of the debts of the company. I am advised by Revenue that they may, in appropriate cases, provide financial support to liquidators to pursue such actions.