The Revenue is to strengthen its intelligence gathering operations and is to set up special regional units to monitor individuals who are amassing wealth.

Its chairman, Mr Frank Daly, said it was not establishing its own "secret service" but it will be deploying staff to monitor what is going on in the regions.

"They will be gathering local intelligence, reading the newspapers, looking at planning permission applications and land banks," he told the Dáil Committee of Public Accounts (PAC).

The first radical overhaul of the State's tax collection agency since its foundation 80 years ago will also lead to a large companies division which will allow Revenue Officials to "sit on" extremely active businesses.

Addressing the PAC yesterday, Mr Daly, admitted that one of the primary reasons some companies managed to evade large amounts of tax was because it was unable to identify the key individuals funding and controlling a myriad of companies.

There has been general abuse in this regard within the property development, pubs and the leisure industries, which tended to be fairly significant in terms of the amount of tax at risk, he told the committee.

"Most people in the property development and pub industries are tax-compliant and are good citizens. There are problems with a small number of mavericks."

The Comptroller and Auditor General, Mr John Purcell, highlighted three cases where the Revenue wrote off large amounts of money for individuals who had paid a relatively small amount of corporate tax, yet which had very substantial businesses.

In one case related to a property developer, the Revenue wrote off €442,000 in corporate tax from 1998 on the basis that neither of the two directors could be contacted.

Mr Purcell established that the developer and his family were involved in at least 35 active million-pound property development companies in the 1990s including several major industrial estates, office blocks, apartment blocks, townhouse schemes and a shopping centre valued at over £125 million.

Mr Daly admitted the Revenue had not made the linkages that it should have in this and the other two cases.

"This is not a pretty case and I am not here to defend it. We should have come across those three cases and if we were making those type of linkages and giving them the time we would have.

"You can assume that since the middle of last year that would not be the case," he told the committee.

Referring to the property developers case highlighted in the Comptroller and Auditor General's report for 2001, Mr Daly said the developer and his family have since paid more than €15 million in various taxes, and that an investigation into their affairs is continuing.

There are currently 72 companies associated with this developer and his family and it has recently received a statement of affairs in relation to them, he said.

In future, company directors will have to declare their Personal Public Service (PPS) numbers, which will help the Revenue to keep track of all of their business interests.

Mr Purcell said that he accepted that many of the problems associated with these cases pre-dated 2000.

"Things began to turn in 2001 and 2002. More rigour has been applied to write-offs. Based on the findings of this report I can say the Revenue is totally committed to action. That is the vibe and the evidence that I am getting."

One deputy asked Mr Daly whether taxpayers were told when the Revenue wrote off their debt. "We don't tell taxpayers their tax is being written off. We leave them to worry," he said.