Recent developments mean Irish tax payers must ask themselves if they have undeclared offshore income and assets and need to make a disclosure to Revenue by 30 April 2017.

Offshore Tax Defaulters

Under Irish tax law, a tax payer who has not been fully compliant may make a qualifying disclosure to Revenue so as to settle any outstanding issues. Making a qualifying disclosure carries with it significant benefits, including significantly reduced penalties and avoiding publication on the Tax Defaulters’ list.

However, there are now some very significant areas in respect of which the benefits of making a qualifying disclosure are no longer available.

Offshore Income and Gains

Finance Act 2016 includes a measure to preclude a person, as and from 1 May 2017, from making a voluntary disclosure in respect of offshore bank accounts and/or assets.

From 1 May 2017, it will no longer be possible to obtain the benefits of a qualifying voluntary disclosure if matters included in the disclosure relate directly or indirectly to any of the following:

• an account held or situated in a country or territory other than Ireland.
• income or gains arising from a source, or accruing, in a country or territory other than Ireland.
• property situated in a country or territory other than Ireland.

In addition, where there are liabilities arising within Ireland as well as liabilities relating to offshore matters, a qualifying disclosure will be unavailable in respect of all of those liabilities except in limited circumstances. Therefore, if an error is made when calculating a charge to Irish tax and it emerges that there are undisclosed income and assets, then the tax payer will be unable to avail of the benefits of making a qualifying disclosure.

Revenue will allocate additional resources and recruit additional staff to deal with this new project.

Therefore from 1 May 2017, persons with liabilities involving “offshore matters” could be liable to higher penalty rates. Also, the settlements could be published in the quarterly Tax Defaulters’ list.

Finally, the person concerned could be the subject of a criminal prosecution.

Window of Opportunity

The Irish Revenue Commissioners have written to hundreds of thousands of taxpayers requesting that they review their historical tax returns and consider whether they need to make a disclosure.

A qualifying disclosure may still be made by 30 April 2017 in relation to offshore matters, subject to the general rules and requirements for making such a disclosure as set out in the Irish Revenue Commissioners Code of Practice for Revenue Audit and other Compliance Interventions.

Where a taxpayer believes that he or she may be affected by the above provisions, the wisest course of action is to seek professional advice as early as is possible in order to ascertain whether a disclosure is necessary and, if applicable, to obtain the full benefits of early disclosure, including reduced penalties and non-publication.

There are 54 jurisdictions that are ‘Early Adopters’ and are undertaking the first CRS exchanges in 2017:

Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland,
France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Trinidad and Tobago, Turks and Caicos Islands, United Kingdom and the United States (under FATCA).

This article was presented to us by Vanessa Duffy.