The Revenue Commissioners are to carry out an extensive examination of documentation in banks relating to non-resident deposit accounts. The main Irish banks, which hold the forms and declarations which will be scrutinised, have been notified that the examination is imminent.
According to Central Bank figures, there is about £3 billion in Irish pound-denominated non-resident accounts in Irish banks.
While the Revenue has had the power to examine the forms since 1986, this is understood to be the first time they have undertaken such a general examination at all the main banks. Up to now, sources said, particular branches have been visited or particular forms requested.
The Irish Bankers' Federation confirmed last night that notice has been served by the Revenue Commissioners that they intend to examine a sample of the forms held at all the main banks. The number of accounts involved is not known.
Non-resident deposit accounts have sometimes been used by residents to evade tax on interest earned and to hide funds from the Revenue Commissioners. But most are legitimate corporate and personal accounts held by bonafide non-residents, following tightening up of the regulations and procedures in recent years.
However, the Revenue will look for any indications that the accounts have been used to evade tax.
The forms involved are completed by bank customers opening non-resident deposit accounts. They contain the name and address of the account-holder and the names and foreign addresses of the persons entitled to the interest on the deposit.
The Revenue Commissioners have the right to examine the forms but they do not have direct access to the actual bank accounts. High Court permission is required before Revenue officials can examine a bank account.
To qualify as a genuine non-resident account, the person/persons entitled to the interest must reside outside the State. Non-resident accounts are not liable for Deposit Interest Retention Tax whereas tax at a rate of 26 per cent on interest earned is deducted by the banks from deposit accounts held by residents.
Banks are obliged to ensure that the forms are completed before a non-resident account is opened and there is an onus on the banks to satisfy themselves the customers involved are bona-fide non-residents. Banks must keep the forms for inspection by the Revenue.
Banking sources last night described the Revenue move as "an assessment to check that we have the relevant systems and procedures in place to ensure that residents cannot claim the exemptions from DIRT which are only allowed to non-residents". While the Revenue has had the power to examine the forms since 1986, it is understood that this is the first time they have undertaken such a general examination at all the main banks.
The forms involved contain names and addresses and it is not clear how the Revenue will determine if some of the accounts are not bona fide. One source suggested that they may opt to check the names and addresses on a sample number of accounts.
A bank source said a very large proportion of non-resident accounts at his bank contained less than £1,000.
Geraldine Kennedy adds: The Minister for Finance, Mr McCreevy, has rejected Opposition demands to have the Ansbacher deposits placed specifically within the remit of the Moriarty Tribunal.
He told the Dail last night that there was strong legal advice that once a tribunal had commenced its work on existing terms of reference, these terms could not then be changed.