When a person’s tax affairs become a public matter
Be To To Taxpayers The Publicised And Business Will Reputational Enough Can As The Enough Few A Damage Fraudsters, Be Want Tax Force Closed Doors For
Over the years, we have devised procedures to ensure our decision-makers disclose any otherwise private matters that might prompt them to act in their own self-interest.
The requirement to make such disclosures doesn’t just extend to our elected representatives, but also to members of the many types of boards, regulators, and authorities both in the public and private sectors.
Non-compliance with disclosure requirements often bears a heavy price, to which former junior minister Robert Troy can readily attest.
There are, of course, problems with this approach. Providing details of any particular asset or business involvement may keep its owner on the right side of the disclosure rules, but is not a guarantee of a person’s legitimacy.
Nor does it certify any particular ability to carry out the position which required the making of the disclosure in the first place. Outcomes or events where there has not been a lot of transparency engender suspicions that something perhaps was not quite right.
There are some matters where privacy does and should remain an entitlement. There is universal agreement that a person’s medical details are private.
Whether a person’s tax affairs should be private is more contentious, but in this country, they tend to be kept off-limits. Even elected representatives to the Oireachtas do not have to provide specific details of their tax affairs but instead must obtain certification from the Revenue Commissioners that tax matters are up-to-date.
Tax privacy is an entitlement that can be withdrawn. As might be expected, Revenue can charge penalties for tax compliance failure and pursue prosecutions, but they can also publish the name and circumstances of a tax defaulter.
Few enough taxpayers will want to be publicised as tax fraudsters, and the reputational damage for a business can be enough to force the doors closed.
In practice, the number of businesses and individuals whose names are published for tax default is tiny when compared to the number of taxpayers in the country. When it does happen, it is usually because the taxpayer has failed to cooperate with an ongoing Revenue investigation into a serious problem they have.
Furthermore, as with any system with complicated rules, tax mistakes can and do get made. While, as reported in this paper recently, there were unpublished tax settlements with Revenue amounting to €1.36bn in the past year, a sizeable proportion of these would have related to correcting errors rather than making restitution for deliberate tax evasion.
While the figure looks high, it is also the case that Irish businesses act as tax collectors on behalf of Revenue for PAYE and Vat. A payroll error within a business with a large number of employees can result in an alarmingly large tax underpayment very quickly.
Unlike their counterparts in other jurisdictions, the Irish Revenue Commissioners have no discretion as to who gets published once the conditions triggering publication, as set out in tax law, are met.
Therefore, Revenue must go to considerable lengths to ensure the number of cases of tax default published remains small, otherwise publication could well lose its stigma.
There will always be tax settlements, and the majority will always be unpublished. Otherwise, the system simply won’t work.
- Brian Keegan is director of public policy at Chartered Accountants Ireland