A LEGAL LOOPHOLE that allowed 200 wealthy and powerful people to try and avoid paying up to €500 million in tax will not be legislated for.
The Finance Minister Paschal Donohoe told the Dáil that there are no plans to legislate as the case was dealt with when the appeal commissioner and the Circuit Court ruled in favour of the Revenue Commissioners.
Donohoe said, “The Revenue Commissioners have advised me that no change to the law is needed as its position is being upheld”.
He pointed out that the Revenue Commissioners became aware of a matter and issued amended tax assessments in regard to it.
He said a challenge was brought to the appeals commissioner and the Revenue Commissioners won. He added that when they were then brought to the Circuit Court, they also won. He noted that a further appeal was heard and the Revenue Commissioners won yet again.
Therefore, at each stage of this process when the Revenue Commissioners became aware of this issue and took action thereon, on which action it has been challenged, the law they have used and the way in which they have acted have been upheld.
Tipperary TD Seamus Healy said these individuals were wealthy and powerful people and that he wanted to see “the Minister to put a stop to this once and for all by bringing in legislation before the summer recess to make sure this scam cannot continue”. Healy said:
We obviously cannot interfere with what happens in the courts but what happens in the future is not a matter for the courts; it is a matter for the Government. It is the responsibility of the Government to introduce legislation to ensure this loophole is closed, and closed for all time.
However, Donohoe replied that he was advised by the Revenue Commissioners that no change to the law is needed as its position is being upheld. He added:
“The Revenue Commissioners will continue to challenge taxpayers who attempt to extract cash from companies in a tax-free manner.”
Last year it was revealed that some vulture funds were using a loophole to pay as little as €250 in tax.
A clause in an act from 1997 allowed large businesses and vulture funds to set up a qualifying ‘section 110′ company that could operate effectively tax-neutral.
The former Finance Minister Michael Noonan admitted that section 110 was “being used in relation to property in a way that was never intended”.
In last year’s budget Noonan announced that the government was going to move to close off the legal loophole that allowed many large vulture funds to avoid paying large amounts of tax.
Fianna Fáil TD Stephen Donnelly was one of the first to raise the issue of loophole’s being left open. He estimated that the loss in taxes to Ireland could be over €1 billion a year.