The decision of an appeal commissioner to dismiss a Revenue tax assessment of approximately £2 million against the former Taoiseach, Mr Charles Haughey, will be reheard in the Circuit Court within months, sources said last night.
A formal decision by the Revenue to appeal the matter to the Circuit Court will be taken within the next week. New evidence can be brought to the court hearing, which would be heard in camera.
Because the assessment concerns Capital Acquisitions Tax, the option of rehearing the case in court exists. If the assessment was in relation to income or corporation tax, the only option open to the Revenue would be an appeal to the High Court on a point of law. Tax experts yesterday expressed surprise at the decision of the appeal commissioner, given the evidence which had been heard by the McCracken tribunal.
During public hearings of the tribunal in July 1997, Mr Haughey read a statement in which he said: "I would like to reiterate that I now accept that I received the £1.3 million from Mr Ben Dunne, and that I became aware that he was the donor to the late Mr Des Traynor in late 1993, and furthermore I now accept Mr Ben Dunne's evidence that he must have handed me £210,000 in Abbeville in November 1991."
Mr Traynor was Mr Haughey's financial adviser and acted as a conduit for payments from Mr Dunne to Mr Haughey. The November 1991 payment of £210,000 sterling was handed personally to Mr Haughey in the form of three sterling drafts. Mr Justice McCracken said the tribunal was satisfied "beyond all reasonable doubt" the £1.3 million from Mr Dunne went to Mr Haughey. An appeal commissioner has to be convinced only "beyond the balance of probabilities".
The Revenue assessment against Mr Haughey is understood to have been based on the McCracken report. Capital Acquisitions Tax is charged at a rate of 40 per cent. The assessment would have included interest and possibly penalties. The £1.3 million was given to Mr Haughey between 1987 and 1992.
The hearing of Mr Haughey's appeal took place on July 29th and is understood to have lasted for a full day. Mr Haughey was represented by Mr Paul Sreenan SC, and the Revenue by Mr James Connolly SC. A number of leading tax experts contributed on Mr Haughey's behalf. The details of the arguments are not clear, though Mr Haughey's case is understood to have been based on successful arguments of inadequate proof, and specifically that the McCracken report was not adequate or proper proof for the tax assessment.
It is now open to tax inspectors to cross-examine Mr Haughey in relation to his affairs and inspect his books, in order to gather evidence to support their new case. They may also inspect books kept by accountancy and financial services companies in relation to Mr Haughey. Tax experts said that, given what had been revealed to the McCracken tribunal, a more forceful case in favour of the assessment against Mr Haughey would be likely to be made in the Circuit Court.
The appeal was heard by Mr Ronan Kelly, one of two appeal commissioners. He disclosed his decision to the parties on Tuesday. The decisions of appeal commissioners are not usually published, though publication is possible after new provisions in the last Finance Act. The second commissioner is Mr John O'Callaghan. The Office of the Appeal Commissioners is independent from the Revenue and is a first port of call for taxpayers who wish to contest a Revenue assessment. There was no comment yesterday from Mr Haughey.
