# Unit-linked Funds Next Investigation



## Raul (27 Feb 2004)

The SBP wrote last Sunday that single premium policies at Life Offices will be next to be trawled. If true this could lead to a very serious problem. These funds until the change in 2001(?) paid retention tax at source. Everyone knew including Revenue that much business may not have been run through taxpayers accounts - hence the ad byline "Confidential", but there always was an assumption that the mexican stand-off between Revenue and the life industry was because  (unlike Banks and BNRA's) retention tax was paid.

If Revenue attack these funds billions could be at risk. Whatever about going hot after offshore accounts that do nothing for the economy, the life industry is a HUGE investor in Irish Gilts, Property, PLC's AND Jobs. Is this story for real?????


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## rainyday (27 Feb 2004)

I guess [broken link removed]. I'd be grateful if Raul or others could explain where exactly tax evasion comes into it - Is it simply known that piles of hot money went into these products or what?

Raul - Are you saying that we should turn a blind eye to tax evasion because of the trickle-down impact of these investments? Shurley shome mishtake!


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## Postman Pat (27 Feb 2004)

*Savings Certificates*

Anyone remember those savings certs when An Post used the exact same line as everyone else - "totally Confidential", which everyone knows is code for we won't tell the Revenue and that was from an arm of the State.


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (27 Feb 2004)

*Re: Savings Certificates*

I don't understand where the scope for tax evasion comes in here (unless it's what Rainyday suggests). In the past UL funds were net roll up and all taxes were paid within the fund on a daily basis and reflected in the unit prices. Since gross roll up funds were introduced (now largely the norm) tax is deducted (standard rate plus 3% on any growth) at encashment. Unless the institutions were not deducting or remitting the relevant taxes then I can't see how there is any scope for individuals to evade tax with these products.

By the way - An Post Savings Bonds/Certs are and always were tax free.

Update: just read the article and it seems that the issue is the one that Rainyday mentions:



> The inquiry will impact on the financial affairs of hundreds of thousands of people in the state who have invested billions of euro in single premium policies. It will examine whether the money used to set up the policies had been declared for tax.


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## Postman Pat (27 Feb 2004)

*Savings Certs*

The game now has moved way beyond people avoiding tax on their interest it's all about stashing away hot money.

The need to declare interest for tax purposes was a big deterrent to hot money going into domestic deposits.

An Post initially simply made a play that their returns were tax free and thus no declarations were needed - they felt that was sufficient enough to attract the hot money.

But then when the EU freed up the movement of deposits the authorities moved to make Deposits subject only to DIRT, i.e. no disclosure needed,  so as to hold the hot money within the State.  

With no need to declare, the only issue for hot money was whether the institutions would report them - hence the buzzword became "fully Confidential".  As I said, An Post joined the bandwagon.

Let's be absolutely clear on this, everybody knows that our business will be confidential in the sense that any old Teresas, Deirdre or Henrietta can't get their hands on the info.

What Confidential meant was "we won't tell the Revenue".  Shame on An Post, shame on Ireland inc.


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## Tommy (28 Feb 2004)

*Re: Savings Certs*

I suspect many oul' wans around the country took the "fully confidential" line to mean that An Post wouldn't tell the Social Welfare people about the few grand they had stashed away in savings certs towards funeral exps etc in case it would affect their pension.

I can't imagine too many sane people bringing large 5 or 6 figure sums to their local postmaster/mistress to invest in savings certs. After all the local post office counter doesn't have the same aura of discretion as your typical bank manager's office.


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## Mitch (28 Feb 2004)

*Fully Confidential*

I think you're wrong Tommy.  FC meant we won't tell the Revenue.

Now in the banks' case they could argue that in promoting FC they were merely assuring customers that if they so chose they could evade paying tax on interest - a crime yes but pretty low key, compared to sheltering HOT MONEY.

In the An Post case there was no tax on interest so their loudly promoted claim to be FC was targetted at one audience and one audience only - HOT MONEY.


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## Tommy (28 Feb 2004)

*Re: Fully Confidential*

time will tell, but



> Now in the banks' case they could argue that in promoting FC they were merely assuring customers that if they so chose they could evade paying tax on interest



if any bank is saying this then this sounds suspiciously like self-serving propaganda designed to explain away a major scandal from which the banks (and their staff) extracted handsome profits 



> - a crime yes but pretty low key,


eh? - I strongly disagree. After all we are talking here about an enterprise  based on widespread facilitation of and incitement to tax evasion. If a backstreet moneylender tried it they would probably be jailed.


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## daltonr (2 Mar 2004)

*Re: Fully Confidential*



> After all we are talking here about an enterprise based on widespread facilitation of and incitement to tax evasion.



This is the part of this story that will leave the worst taste in the mouth when the history of it is written.

But financial institutions are not stupid, they knew that as long as they weren't on hand when the investor filled in their tax return they're probably in the clear.

-Rd


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