Irish lawyers rise up against government 'informers' charter'

SOLICITORS in the Irish Republic are in open revolt over new government legislation which they say is attempting to make them spy on their clients for the tax man.

Under the measure, proposed in the Finance Bill, solicitors, accountants and auditors must inform the Revenue Commissioners about any suspected tax evasion by their clients.

The measure covers not just non-payment of taxes but also late PAYE and VAT returns involving amounts over £5,000.

If the proposal becomes law, solicitors and other professionals who fail to report such misdemeanours will be liable to fines of up to £5,000 and/or two years' imprisonment.

The legislation stems from the recent marathon inquiry into fraud and malpractice in the Irish beef industry. It uncovered widespread tax evasion, running into millions of pounds, which had been ignored by the auditors of the companies involved.

The chair of the inquiry, Mr Justice Liam Hamilton – now Irish Chief Justice – recommended in his report that auditors were made liable for alerting the tax man to such practice in future. Finance minister Ruairi Quinn claims this is what he is attempting to do with the Finance Bill measure.

But solicitors, who have denounced the measure as “an informers' charter”, say he has gone further than Mr Justice Hamilton intended, and that the tradition of client confidentiality is being undermined.

The Incorporated Law Society is considering a court challenge to the bill on the grounds that this particular section may be unconstitutional. The society's director-general, Ken Murphy, described the measure as a “pernicious piece of legislation” and said that most of the members who have contacted him had insisted they would not comply with it.

“Although this section is confined to tax compliance, the issue will damage and undermine the historic and respected tradition of confidentiality between solicitors and their clients,” says Murphy.

A lobbying operation is now under way to persuade Quinn to restrict the measure to auditors – the original target for Mr Justice Hamilton's criticisms.

Other professional bodies involved are also gearing up for a fight.