Mr Charles Haughey has had a tax assessment of about £2 million dismissed by appeals commissioners.
The decision to reduce to zero the tax charge, which was based on the findings of the McCracken tribunal, was disclosed yesterday. The Revenue Commissioners will now consider appealing the decision to the courts.
The former Taoiseach was not available for comment last night and his wife, Mrs Maureen Haughey, said she had no information concerning the decision. A spokesman for the Revenue said he would not comment on the affairs of an individual taxpayer. However, he added that it was "standard practice where considerable tax is at risk or where points of tax principle are involved to vigorously pursue such liabilities and matters through the courts".
Legal sources said Mr Haughey's successful use of the appeals mechanism will move the burden of proving the tax due by him onto the Revenue Commissioners should they bring a further appeal to the courts.
A tax assessment was made against Mr Haughey after Mr Justice McCracken reported in August of last year that the former Taoiseach had received £1.3 million from the businessman Mr Ben Dunne between 1987 and 1991. The Revenue decided the Capital Acquisitions Tax (CAT), plus interest, due from these payments, was about £2 million. CAT is charged at 40 per cent. It is not known if there were penalties involved in the assessment. It is understood the assessment was based on the McCracken report rather than material gathered by the Revenue.
The appeal against the assessment was heard about two months ago by an appeals commissioner, Mr Ronan Kelly. The appeals commissioners are independent of the Revenue and are a first port of call for any taxpayer who wishes to question an assessment. The procedure is a quasi-judicial one wherein the assessment is examined by the independent commissioner, who decides whether it should stand, be dismissed or reduced. The decision to reduce Mr Haughey's tax assessment to zero was announced yesterday.
The basis for Mr Haughey's argument against the assessment was not immediately clear but is understood to have been based on arguments of inadequate proof. Mr Haughey was represented before the appeals commissioners by Mr Paul Sreenan SC. The Revenue was represented by Mr James Connolly SC.
The McCracken tribunal's legal team followed a "money trail" which showed cheques and bank drafts issued by Mr Dunne being lodged in bank accounts in Dublin and London which were controlled by the late Mr Des Traynor, the former financial adviser to Mr Haughey, and a Cayman Islands banker, the late Mr John Furze. The funds were, in the main, deposited with a bank in the Cayman Islands, Ansbacher (Cayman) Ltd. This bank in turn deposited funds in Dublin banks and some monies from these deposits were shown to be used to pay bills for Mr Haughey.
Mr Justice McCracken acknowledged that "there are some missing links" in the money trail but said the tribunal was "satisfied beyond all reasonable doubts" that the monies from Mr Dunne went to Mr Haughey. In the case of a payment of sterling £182,630, paid out in November 1987, the funds were traced by the tribunal through a number of London and Dublin bank accounts, before £105,000 from the payment was used to pay off a loan Mr Haughey had with the Agricultural Credit Corporation. The rest of the money was withdrawn in cash.
In the case of three bank drafts for £70,000 sterling each, Mr Dunne told the tribunal these were handed by him to Mr Haughey in the then Taoiseach's home, in November 1991. The money was subsequently lodged to an account the Cayman bank had with Irish Intercontinental Bank and which was controlled by Mr Traynor. Mr Haughey told the tribunal he did not remember receiving the drafts, but accepted that he had and that they were used for his benefit.
