Number of super-rich facing tax probes by Revenue set to double

The number of high rollers who face a Revenue probe of their finances will more than double after the slashing of the threshold for the level of assets that will be included in the management of large cases.

The Revenue Commissioners have said that the new threshold to be included in its trawl of high wealth individuals (HWIs) division will be cut to €20 million from €50 million. In a new report the tax authority said that based on the data available to it this will see the number of cases it deals with rise by 475 on top of the current 200 individuals.

The Revenue has undergone an internal restructuring and current high net worth individuals are now overseen by a dedicated unit within its Large Case Division, which had previously looked after the tax affairs of major companies and wealthy people. The Comptroller & Auditor General, the state’s public spending watchdog, recommended the reduction in asset levels last year.

According to the report, “given the considerable risks attributed to HWI taxpayers and Revenue’s core statement that taxpayer behaviour determines Revenue’s response, the resources available to manage the HWI case base have been increased”.

The report said that as the criteria for classifying these individuals is wealth, identifying who they are is challenging. While taxpayers are required to disclose their income, there are no obligations to disclose wealth or assets unless there is income tax or capital gains tax to be paid.

“Significant income is an indicator of wealth. However, wealthy individuals do not necessarily receive regular high income,” the report said.

That requires Revenue to look at other sources, although it still faces a number of hurdles in tracing the asset base of high net worth individuals. It said the tax affairs of these individuals can be difficult to monitor because of “complex business arrangements entered into” and “the high mobility of HWIs and the cross-border nature of their businesses and investment portfolios”, “the variety of investment vehicles used by HWIs” and the “limited availability of publicly available data and HWIs’ strong desire for privacy”. In addition to reviewing information in disclosures made to it by individuals who disposed of assets, it would also seek to identify people who should be included in the HWI case list through acquisitions. It said it had identified 33 taxpayers not in the high wealth list who had acquired assets in excess of €20 million.

It addition to using its own information, the Revenue report said it would cross-reference names on newspaper rich lists. It said that in a trawl of 2018 rich lists, it found 68 taxpayers who had assets greater than €20 million.

Of those, the Revenue said they had not been added before because of a number of factors. Among the reasons was because the taxpayers were “beneficial owners of companies held through a corporate structure” or were shareholders in high-value non-resident companies that were previously not reviewed.

Among the other recommendations in the report were that the Revenue should look at adult children or relatives to see if they are actively involved in running a family business in order to determine if they should be included on the list, and to look at asset transfers and the establishment of trusts.