Offshore Account Disclosures
Anti-Avoidance
Section 54 Finance Act 2016 makes a number of changes to the tax code which will reduce the level of penalty mitigations for tax defaulters with off-shore irregularities giving rise to an Irish tax liability.
The amendments withdraw, from 1 May 2017, the penalty mitigation arrangements, currently available to tax defaulters who make a qualifying disclosure to Revenue, in two situations:
- firstly, where the disclosure relates directly or indirectly to offshore tax defaults, and
- secondly, where the disclosure relates to any other tax default in circumstances where the person has, before the date of the disclosure, certain “offshore matters” that are known or become known to Revenue and which are matters occasioning a liability to tax that gives rise to a penalty.
An “offshore matter” includes any accounts, income, gains or property held outside the State. These amendments take effect from 1 May 2017.
Taxpayers have until 30th April 2017 to come forward with offshore tax irregularities before the restrictions apply. Revenue recently confirmed that it will accept calculations based on the roll-up of liabilities to 2006 such that irregularities per-2006 will be taxed at 2006 tax rates and interest will also run from 2006. This approach is reflected in Revenue’s liabilities estimator. Revenue also confirmed that 100% penalties will apply to pre-1991 irregularities but the other benefits of a qualifying disclosure will apply if the disclosure is a full and true disclosure.
Revenue recently published updated guidance on making a disclosure and has produced an explanatory memorandum on the Finance Act 2016 changes as well as FAQs about qualifying disclosures.