Irish Life's Decision Not To Participate In Life Assurance Tax Probe Condemned

by Jason Gorringe, for LawAndTax-News.com, London

19 April 2005

The stance taken by Irish Life & Permanent with regard to the Revenue Commission's latest tax probe has come in for some criticism in the Republic's media this week.

The probe into outstanding tax liabilities resulting from the purchase of single premium life assurance policies with undeclared assets is thought likely to bring an estimated EUR1 billion in outstanding tax from around EUR30 billion worth of life insurance policies bought between 1988 and 2001 into government coffers.

The investigation is similar in form to the recent investigation into offshore bank accounts, and tax officials will be given the right to access the accounts and telephone records of suspects, in addition to new powers to question individuals in police custody. In the early phases of the probe, the investigators are focusing their energies on those who made aggregate investments of more than EUR20,000.

The Revenue Commission has assured that those who make a voluntary disclosure before May 23 will not have their names published, although it warned that it will go through the courts to catch those who do not declare their evaded tax.

Earlier this month, life assurance firms were urged by the Revenue to write to around 200,000 customers informing them of the investigation, although the industry itself is not under investigation for selling the insurance products in question.

However, according to an Irish Independent report, Irish Life has refused, arguing that it is not legally obliged to participate in the probe, which will bring it significant additional costs for no benefit.

The Irish Independent argued on Monday that in ambiguous cases (such as where one partner did not know that their spouse had used the policy purchased through Irish Life to evade tax), the failure to come forward during the voluntary disclosure period could have dire consequences.

"Irish Life has a duty to its shareholders, and management can say that it has no intention of getting involved in a voluntary, expensive exercise aimed at helping bring in money for the Exchequer and nothing to itself. But similarly, there is the potential cost of damage to its wider public image," the report warned.

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