FARMERS are twice as likely to be prosecuted for tax offences as any other profession or business in Ireland, according to figures compiled by the Sunday Tribune. And Dublin has the highest rate of tax offenders brought before the courts, seeing more than twice as many legal actions as its nearest counterparts, Cork and Donegal.
The figures have been compiled from individual court prosecutions taken against individuals and companies for tax offences over the past 10 years.
Between 1998 and 2007, nearly 10,000 prosecutions were brought against those who have committed various tax offences.
The principal charge is failure to file income tax returns but the statistics also include those who have been brought to court for failing to lodge corporation tax returns, VAT returns and P35 returns.
The near 10,000 cases over the last decade have resulted in €14,086,500 in fixed penalties and charges being imposed by the courts.
However, the main benefit of a court action is to secure a tax return, allowing the Revenue to ascertain the income of those who fail to comply.
Most of the fines and penalties come from tax-related offences but some customs offences are also included in the total.
Dublin had the highest level of non-tax compliance cases, with almost 2,500 since 1998, followed by Cork (1,060), Donegal (1,006), Kerry (367) and Mayo (487).
The counties with the lowest number of prosecutions were Leitrim (94), Kilkenny (108) and Sligo (119).
In terms of professions and businesses, the farming sector far outweighed any other when it came to court actions.
Farmers were responsible for around 1,757 cases. They were followed by builders and developers, who didn't even break the 1,000 mark with just 913 cases.
Shopkeepers followed with 499 cases, then company directors (369) and mechanics and garages (349).
Engineers, plumbers and plant hire and quarry operators came bottom of the top 20 list for professions but the total list of cases covered a wide variety of income types, from barristers and doctors to butchers, bakers and, literally, candlestick makers.
Haulage companies, taxi and hackney drivers and publicans also featured heavily in the 40 quarterly reports, which give a comprehensive picture of tax compliance in Ireland's workforce, outside the world of fat-cat business.
In an interview with the Sunday Tribune, Revenue Commissioner Michael O'Grady said while the list of prosecutions was high, most of the country's workforce was tax compliant.
He also stressed the Revenue's approach to taxation enforcement was primarily one of help and assistance and that litigation was a last resort. The figures compiled here are separate from non-court settlements made with the Revenue in relation to offshore accounts and other heavily documented tax evasion cases.
"These are people very often who aren't represented by any agent and they are on the bottom end of the scale; they are not really representative of the state of compliance," said O'Grady. "They are quite small by and large; on occasion you get a big fish."
'Essential' to get a return
The commissioner explained that while there are monetary penalties for those convicted of tax offences, there are other, more important, reasons for pursuing the legal route.
"The reality is that we don't know what their income is unless they file a return. If you have no idea you have to get a return. It's not a case of pick a profession out of the air and say he is a taxi man so his income must be X or Y. It is essential to get a return to see what the scale of the business is and in order to get the return you have to use what powers are available to you."
The preferred way to pursue the non-payment of tax is to estimate the level owed by an individual or business and bring in the sheriff. However, it is not always possible to make an accurate estimate and court cases are used in order to people to comply with the Revenue.
Up to 50,000 warrants are sent to the sheriff every year, while the Revenue employs external solicitors to assist in some 6,000 cases annually.
"Clearly we know that cases are in business and they haven't filed returns," explained O'Grady. "We can go direct to court or we can raise an estimate and collect the tax. But why you see a lot of income tax cases is because we need to get a fix on the actual amount of income."
O'Grady insists Irish tax enforcement – in terms of success and powers – is on par with that in other European countries.
He believes powers introduced in
1999 were the turning point for the Revenue and further enforcement powers have enabled them successfully to pursue those who attempt to slip beneath the tax radar.
Since the 1980s, across all kinds of cases, the Revenue had pulled in €2.5bn in interest and penalties alone.
"Obviously the effectiveness and power of the Revenue is another major factor and things have improved in these areas largely because in the last 10 years we have received a lot more power of access to finances.
"As far as these powers are concerned we are on par with a lot of our European counterparts. Before 1999 we were behind but in the wake of the Dirt inquiry and the tribunals we got these powers. 1999 was a watershed year in terms of power and getting access to information."
The Revenue is increasingly using third-party information in the war against tax cheats.
This information comes from several sources including rental income, dividend income and property income. It can arise as a result of detailed data analysis, on the basis of the vehicles someone is driving or simply if their general lifestyle doesn't tally with what is on paper.
"Obviously we are trying to demonstrate to people that the system is fair in terms of its administration, that you don't have dishonest people being funded by honest people," said O'Grady.
Enter the name and shame system – the publication of quarterly reports listing everyone who has been found by the Revenue to have avoided their tax responsibilities, whether they have ended in court action or settlements.
Its logic is threefold: to deter people from attempting to slip the net, to make very clear the potential consequences to those who try, and to lend transparency to the work of the tax authorities.
Often the penalties and interest levied on those who are caught is three to four times the amount of the tax itself, illustrating the expense that goes with evasion.
"It can be quite punitive. Obviously we are happy that the deterrent effect will deter people," said O'Grady.
But when it comes to the 'little' and 'middle' man, the Revenue isn't that keen on issuing court proceedings unless absolutely necessary.
Many of the above cases end up in litigation because the earners get into difficulties understanding the tax process.
This is another focus of the Revenue service, and where much of its money goes. It is constantly assessing how to make self-assessment and the filing of returns as simple as possible.
In particular this can be seen with the launch of the Revenue's online service. The Revenue will also insist that those who contact them directly with difficulties over their tax affairs will receive full support, long before any legal action is implemented.
"We do everything possible. It's only the people who don't respond to any communication from us that end up
in court," said O'Grady. "Over the last
10 years the actual level of tax debt has gone down significantly and we now have one of the best ratios of debt to collection."
A recent survey showed that public opinion was less critical of tax evasion than of other crimes.
"The difficulty with these type of surveys is that, while murder and rape are absolutely bad, tax evaders can be relatively bad depending on whether you have the guy with the nixer or the guy with the million-euro bank account. Opinions can vary."
The survey was not of major concern to the Revenue, but the commissioners are preparing to mount a major research project of their own to gauge public perceptions of the service and Irish taxation in general.
"If there is a perception that tax evasion is a minor issue not to be worried about, then that is of concern to us. Essentially what we are trying to do is get a feel for what people think of the Revenue in terms of finances and effectiveness and people's attitudes towards different types of wrongdoing. It will help us shape our responses.
"You have to win hearts and minds as well. There has to be a sort of general hardening of public views towards tax evasion if we are to be successful. We have seen it with drink driving and insurance fraud; we also need to see it with tax."
While the size of Ireland's 'black economy' – financial transactions that escape the tax net – is difficult to ascertain, it is a constant battle to keep people compliant and to ensure that the system is accessible and not too intimidating.
The recent downturn in the economy will have an effect on the amount of revenue pulled into the exchequer but O'Grady was reluctant to comment on how budget cutbacks might affect its service.
"We are in discussions about the budget obviously but we like to think that we are an adaptable organisation. While we would welcome additional resources it is only a question of how we use our existing resources.
"We don't want tax inspectors hiding behind every rock on the road. We want to ensure that the system is reasonably balanced and have a focus on the guys who really need our attention."
This is the crucial point. While the Revenue will prosecute anyone who continually ignores their tax liabilities, some offenders are far more important than others.
A company that is slack about filing returns can expect a knock on the door far sooner than a self-employed plumber who is late with an income tax return. 'Big fish' come under the microscope more often than bottom feeders.
For instance, the Revenue uses a 'risk score' system, where individual cases accumulate risk points based on the total value of third-party information received about them. The top scoring 20% of those cases will receive the 'dominant' attention.
Certain industries and business profiles have also received special attention in the past and will continue to do so in the future.
"We have had a big focus in recent years on construction because of its size. We are increasingly looking at cash businesses because they tend to be high-risk," explained O'Grady. "We haven't yet identified what sectors will be of particular focus [in the coming year] but clearly cash businesses will feature heavily. They will always be considered high-risk."
But at the end of the tax year, the message from the Revenue, and from the Commissioner himself, is clear: people fall into difficulties with tax and the service is there as much to support as to prosecute.
"There are people in trouble at the moment and we are asking them to get in touch and show good faith but there is no question of a let-up," said O'Grady. "We do want to help people and we don't want to bring them to court. But things happen and if you ignore the brown envelope, something is going to happen."
top 20 professions/ businesses Prosecuted by revenue 1998–2007
1 Farmers 1,757
3 Shopkeepers 499
4 Company directors 369
engine repairs 349
6 Hauliers 319
7 Taxi/hackney drivers 252
8 Carpenters 239
9 Restaurants/eateries 238
10 Couriers/delivery services 230
11 Publicans 225
12 Rental/investment income 224
13 Agricultural contractors 209
14 Electricians 208
15 Accountants 171
16 Plasterers 166
17 Painters/decorators 155
18 Plant hire/quarry 147
19 Plumbers 137
20 Engineers 124