Galway ‘phoenix’ companies to be targeted by Revenue

Date Published: 23-Apr-2012

BY ENDA CUNNINGHAM

Owners of ‘phoenix’ companies in Galway are being targeted for investigation by Revenue and are set to be presented with massive tax bills, the Sentinel has learned.

It’s understood that Revenue is preparing files on a number of businesspeople in the city who have liquidated their companies and then restarted under a new guise in an effort to avoid paying their debts to the taxman and creditors.

Inspectors are combing through the personal details of the directors and have placed them on a ‘watch list’ for two years to see if they comply with tax regulations in any new companies.

Over the past four years, Revenue has lost out on millions of euro in unpaid taxes by companies in Galway which were liquidated and subsequently ‘rose from the ashes’.

As well as the detailed files, several businesspeople here now face a full audit of their personal and family finances, and a hefty tax bill if they are found to have pocketed assets or funds from liquidated companies.

This is often done through directors’ loans, or through intra-company loans from the ‘bad’ company to the new venture, or where assets are moved to a new company – or people connected to the director.

Galway-based insolvency specialist Conor O’Boyle of O’Boyle & Associates told the Sentinel: “There are businesses out there where the directors just close and reopen the doors overnight .

“It’s blatantly obvious what’s going on and Revenue Commissioners are well aware of the practice and the extent of it, and quite correctly will not allow it to continue, and will undoubtedly selectively target specific individuals or at the very least micro-manage their current level of tax compliance, both corporate and personal,” said Mr O’Boyle.

Another source said: “They are targeting people who are blasé about it. They close, give the place a lick of paint and they’re back open again in a few days, trading through a new company and debt free.

A recent study found that 1 in 20 new companies formed in this country is a suspected ‘phoenix’.

Read more in today’s Connacht Sentinel