CREDIT CARD INFORMATION AND TAX EVASION
It was reported earlier this month that the Revenue were to begin targeting credit card transactions as a way of uncovering tax evasion. This new endeavour came to light after it was revealed that over 2000 Irish companies had made payments to the Revenue Commissioners after failing to declare tax in full.
The Revenue Commissioners say that the practise of examining credit and debit card data to investigate tax payments is now active. The information is being released by merchant acquirer firms. These firms process credit card payments on behalf of the merchant you purchase from. Their data will then be compared to the data submitted by the individual or business in order to assess any issues or differences. Any discrepancies found would be flagged as a potential risk of evasion, to be given a closer look.
How is this information being released, you may ask? Legislation enacted two years ago states that these merchants are obliged to divulge information on transactions over a certain threshold. The Revenue are currently making an attempt to ramp up its digital focus as concerns grow regarding the easier tax evasion in this area.
The general idea here, is to ensure that The Revenue Commissioners have all the information they possibly can, in order to assess effectively. In order to do this, As the Revenue Commissioners have now increased their digital focus, they are now engaging new teams in the advanced analytics area. This process utilises a wealth of digital resources in order to flag potential tax evasion.
Declan Rigney, assistant secretary in the Revenue’s planning division has stated that the information has been of great benefit to their research into potential evaders:
“We are able to match information up with our records and see firstly, do we know about them, and secondly, have they registered with us and have they declared income and so on. After that, we can examine if that cumulative figure for the year matches what they have told us in their income tax or corporation tax returns”
Revenue have now stated that their advanced software, known as the Risk Evaluation Analysis and Profiling (REAP) system – (which sounds a lot more violent than it is we promise), can now accurately predict whether someone is potentially evading tax payments or not. This system can also compare cases in order to highlight potential issues that may otherwise have gone unnoticed.
So, it would seem that the ‘Tax Man’ has now well and truly entered the modern age, and with all this technology at the Revenue’s disposal it hopes to ensure that tax evasion becomes a thing of the past.
If you require any assistance or advice on managing your own or your businesses taxes and finances, please don’t hesitate to contact us at DCA Accountants.