The Department of Finance is looking at measures which would ensure the Revenue Commissioners can obtain full interest and penalties on unpaid tax from banks as a result of the DIRT inquiry.

The Department is in discussions with the Attorney General's office about the details of the statute of limitations, which generally allows penalties to apply only up to a 10-year period. This 10-year limit is normally waived in cases of fraud. However, it is not clear whether the Revenue would be able to apply this in the case of unpaid DIRT and the Department is understood to examining whether legislative changes are needed. The Dail Select Committee of Public Accounts' (PAC) sub-committee, which examined the DIRT issue, recommended that full interest and penalties apply in the case of unpaid DIRT.

This would significantly increase the tax settlements which the banks would have to pay.

New measures, if agreed, will be included in the upcoming Finance Bill.

The preliminary list of measures to be included in the Bill was published yesterday, but there was no mention of any of the detailed recommendations of the PAC sub-committee.

According to Mr Michael Tutty, second secretary at the Department of Finance, the Department is still looking at some of the key recommendations and is evaluating to what extent they should be implemented in the Bill.

One of the areas which it is examining is whether to make changes to the ability of the Revenue Commissioners to look back on unpaid tax liabilities with a view to extending the period. The possibility of the Revenue bringing in outside auditors to assist in this process is also being examined.

However, Mr Tutty warned that it was still not clear whether any or all of these issues would be dealt with in the Bill itself.

The Department would also have to consult the Attorney General's office, he warned. Given the limitations of the time, not all the measures might be included in the upcoming Bill.

The PAC recommended that the Revenue Commissioners should undertake a full look-back audit to April 1986 of each financial institution to assess DIRT liability, with the cost of the audit to be borne by the financial institution being examined and the exercise to be completed by September 1st, 2000.

It also recommended that the Government should consider the imposition of a levy on the financial institutions, the proceeds of which would go towards a foundation for investing in communities.

The Department is understood to be investigating how this recommendation could be implemented.