IRD preparing to prosecute tax defaulters

Cases are being prepared for the Director of Public Prosecutions (DPP) which would see the Inland Revenue Department (IRD) in a position to prosecute “chronically delinquent taxpayers” come May 16.

Comptroller of Inland Revenue, Kelvin Pompey, speaking to SEARCHLIGHT at his office on Tuesday, indicated that come the end of the tax amnesty period, the tax department will be taking a ‘gloves off’ approach to retrieving taxes.

Delivering the 2018 Budget at the beginning of the year, Minister of Finance Camillo Gonsalves indicated that there would be tax cuts across the board, costing the Government 12 million dollars.

Not intending to ‘forego’ this sum, he had stated that the Government intends to retrieve some of the 300 million dollars that they are owed in back taxes.

A tax amnesty period was stipulated to take place before the crackdown, wherein taxpayers would be given from March 15 to May 15 to go into the IRD and negotiate payment plans.

“We have found that many taxpayers are hesitant to call at the department to take care of their tax affairs because of the high interest and penalty, and so it is intended to give persons an opportunity to get on board, to get on top of their outstanding taxes and to become a compliant taxpayer,” indicated Pompey, who stated that the negotiations could see a waiver of 15 – 100 per cent on interest and penalties.

“We will continue to do that in terms of encouraging voluntary compliance, which is, as I said the carrot approach, being a nice tax department and everything, but on the other hand, we would be demonstrating to the chronically delinquent taxpayers, we do have the harsher provisions, that is the stick approach to tax administration and that we are not afraid to use it,” Pompey stressed.

He said the Department intends to use the full force of the Income Tax Act on the ‘hardcore delinquents’ who are refusing to change their behaviour, even after they have been educated and the IRD has reached out to them.

Although the minority, he revealed who some of these ‘delinquents’ are, saying, “We have particular concern in terms of the self-employed: the doctors and the lawyers, the architects, engineers, quantity surveyors, evaluators; those are the persons we note have the highest levels of non-compliance, and we are in particular targeting those persons.”

Another problem that the Department is having, he stated, was with withholding of VAT and PAYE, third party taxes in custody of businesses and employers.

“There are businesses, persons who are deducting the VAT and the PAYE and using it to supplement their cash flow, and as a consequence when it’s time to pay up they find that they have problems,” Pompey stated.

Further, the Comptroller indicating that more attention will be paid to the Grenadines.

“We have to serve our Grenadines taxpayers much more because we find that, especially in the area of construction, we do have some high levels of delinquency in those areas, and it means that we have to be visiting the Grenadines islands much more often.”

The measures under the Income Tax Act will include, “taking persons through the legal process, seizure of assets and property, motor vehicles, boats or whatever persons may have, as well as levying on property, garnishment of bank accounts,” according to the Comptroller.

The Department is in a much better place than they were five years ago, says Pompey, to facilitate an ‘aggressive’ pursuit of those who have not paid taxes.

“We have hired a lawyer, internal, full member of staff, and we have also engaged legal counsel in the private sector to help us take cases through to criminal proceedings against delinquent persons,” he intimated.

Tax evasion is a crime and the Department will be ready to take ‘delinquents’ to court, says Pompey.

“We are actively, at this point, preparing cases for the Director of Public Prosecutions. I mean if those persons who we are preparing cases for or on, if they come in and take care of their taxes, then of course we have to quash that case, but we are working on both fronts, because I think we recognize that we have persons who decide that they’re not going to. So, once the 15th of May comes, it’s a gloves off approach we’ll be taking.”

Pompey noted that the IRD will be expanding its efforts with intelligence gathering.

“Now we’ve been going to the financial institutions, and asking other institutions about who they paid monies to for services, and things like that, so that we can then use that information to make assessment on others.”

However, the comptroller has indicated that the reaction thus far has been encouraging, in that persons have been calling the Department to speak about paying their back taxes.

“We have been getting good responses to date and we expect that through this amnesty we are going to make a significant impact on the road into the outstanding 300 million dollars,” he predicted.

Regardless, once May 15 passes, Pompey indicated that the IRD will taking a different approach, “Upon the expiration of the amnesty, it’s not going to be business as usual.”(KR)