Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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266. To ask the Minister for Finance the projected budgeted revenue cost for the full year in 2022 arising from the provisions of section 72 of the Finance Bill 2021 that removes the prohibition on reduction of penalties in offshore cases; and if he will make a statement on the matter. [54683/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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Section 72 Finance Bill 2021 proposes to remove the prohibition on making a qualifying disclosure where any matter contained in the disclosure relates to “offshore matters”. The aim of this amendment is to facilitate voluntary compliance and Revenue wants to encourage taxpayers to come forward voluntarily before they are contacted. The existing legislation means that there is no incentive for certain taxpayers to come forward in advance of a Revenue compliance intervention. It has also created difficulties whereby minor offshore matters could prejudice disclosure of an onshore default to the extent that taxpayers with any offshore issues were effectively disincentivised from using the disclosure regime.

This amendment will afford taxpayers an opportunity to avail of reduced penalties in offshore cases. However, it is already possible for taxpayers to have the penalties applying to offshore settlements reduced for co-operating with the compliance intervention. The nature of the behaviour leading to a tax default is also taken into account in determining the quantum of the penalty – that is, whether the default was deliberate or careless, and whether the careless default had or did not have “significant consequences” (where the tax underpayment was more than 15% of the taxpayer’s overall liability for that taxhead).

It is anticipated that these proposed changes will encourage voluntary compliance and as a result will increase the number of settlements agreed with Revenue in offshore cases. Although the amount of penalties in individual cases will reduce, the overall amount collected in tax, interest and penalties is likely to increase as more taxpayers voluntarily comply. Furthermore, the availability of the disclosure programme is expected to reduce the length of time taken to finalise inquiries related to offshore cases and will thereby reduce administration costs.

In summary, it is anticipated that the removal of the prohibition on making a qualifying disclosure and associated reduction in penalties in offshore cases will both increase the number of settlements finalised and the quantum of those settlements.