High Court of Ireland Decisions

1. This matter comes before the Court as an application for leave to enter final Judgment against the Defendant on foot of a claim in the sum of £1,984,626.44 together with interest thereon as endorsed in the Special Endorsement of Claim on the Summons herein. The matter came before the Master by way of notice of motion dated the 16 February 1999 and was sent forward for hearing by the Court.

The claim is made pursuant to Section 8 of the Criminal Assets Bureau Act 1996 by the Plaintiff who is an officer of the Revenue Commissioners nominated by the Revenue Commissioners to exercise the powers and functions of the Collector-General. The claim is in respect of income tax alleged to be due by the Defendant in respect of the years ending the 5 April 1988, 5 April 1989, 5 April 1990, 5 April 1991, 5 April 1992, 5 April 1993, 5 April 1994, 5 April 1996, 5 April 1997.

The Defendant was ably represented by Ms Gabrielle M Wolfe, Solicitor who confined the defence to four grounds submitting that on these grounds Judgment should not be entered and that the matter should be sent for plenary hearing. Specifically no point was raised concerning the right of the Plaintiff to maintain these proceedings nor was any challenge raised to the formal proofs which have been submitted to the Court on behalf of the Plaintiff. I have considered these proofs and I am of the view that they are satisfactory to maintain the present claim subject to the consideration of the four points raised by way of defence.

I now proceed to consider these four points.

The First Point

The first point raised by way of defence is that it is submitted on behalf of the Defendant that the provisions of Section 966(5)(a) of the Taxes Consolidation Act 1997 constitute the purported vesting in an Inspector of Taxes, who is an Officer of the Revenue Commissioners, the Judicial function of making a determination of the tax due by a tax payer which function, since the certificate of this officer is to be taken as proof of the amount of the tax due, is one properly reserved for a Judge appointed within the terms of the Constitution and accordingly the Section is unconstitutional.

Were it not for the fact that, in my view, this point has already been considered and rejected by the Supreme Court, I would have adjourned further consideration of this point and invited a representative of the Attorney General to attend at the hearing. However, I am in no doubt that the determination by the Supreme Court of the issues in Dieghan v Hearne and others [1986] IR 603 enables me to reject this point.

While it is true that in Dieghan's case the Section under consideration was Section 184 of the Income Tax Act 1967 the reasoning in the Supreme Court in that case applies to the present legislation.

When Dieghan's case was under consideration the following was the position. Section 184 of the Income Tax Act 1967 empowered the Inspector of Taxes to raise an estimated assessment to income tax on a person who had failed to make a return of income when required to do so. Section 416 provided that in default of a notice of appeal against the assessment it became final and conclusive. The Collector-General was empowered by Section 485 to issue a Certificate setting out that a taxpayer had made default in paying income tax and the County Registrar or Sheriff was required to levy the sums certified to be in default.

Mr Dieghan commenced proceedings in the High Court seeking a declaration that the actions of the Collector-General and County Sheriff together with certain provisions of the Income Tax Act 1967 were in breach of Articles 34, 37 and 40 of the Constitution.

It was held by Murphy J dismissing the claim that the task of the Inspector of Taxes in making assessments was to compute the amount of tax to be paid having regard to the information provided by the taxpayer. So described, his function was purely administrative and the fact that the taxpayer was precluded from disputing an assessment arose by virtue of something akin to statutory estoppel resulting from the inaction of the taxpayer. With this reasoning Finlay CJ, Walsh J, Griffin J, Hederman and McCarthy J in the Supreme Court agreed and the taxpayer's appeal was dismissed.

Under the provisions of Section 416(1) of the Income Tax Act 1967 a right of appeal is given to the taxpayer which did not exist at the time the Dieghan Case was decided. That Section provides that a person aggrieved by an assessment made upon him by an Inspector is entitled to appeal by giving within 30 days after the date of the issue of the assessment, notice in writing to the Inspector and the Finance Act of 1995 provides that an Inspector of Taxes may refuse an application for an appeal if he feels a taxpayer is not entitled to make such an appeal. The Inspector is required to notify the Appellant in writing of his reasons for the refusal. The taxpayer then is entitled to appeal the Inspector's decision directly to the Appeal Commissioners within 15 days of the date of the issue of the refusal.

Accordingly I am in no doubt that the reasoning of the Supreme Court in the case of Dieghan v Hearne remains valid notwithstanding the changes in legislation since it was heard.

The Second Point

The second submission made on behalf of the Defendant relates to the Waiver of Certain Tax, Interest and Penalties Act 1993 ("The Tax Amnesty Act").

It is submitted that the Defendant in this case availed of the provisions of that Act and that the Plaintiffs are accordingly estopped from pursuing this claim.

The evidence advanced by the Defendant in support of this claim is contained in paragraph 8 of the Affidavit of his Tax Consultant, Mr John McGrattan sworn on the 9 March 1999. In this he says I say and believe that the Defendant has the benefit of the statutory amnesty under the terms of the Waiver of Certain Tax, Interest, and Penalties Act 1993 which statutory amnesty affords him a defence to all attempts to reassess the Defendant for taxes prior to the year 1994.

I say and believe that to my knowledge from an inspection of the Defendant's papers for the purpose of this Affidavit that no approach has ever been made against the Defendant under the appropriate provisions of the Waiver of Certain Tax, Interest, and Penalties Act 1993 disputing his entitlement to such amnesty.

Section 6 of the Waiver of Certain Tax, Interest and Penalties Act 1993 provides as follows:

6. Demands or other requests for payment

Where in relation to an individual

(a) The Revenue Commissioners, the Collector-General or any of their or his Officers authorised in that behalf have demanded or otherwise request the payment of any tax

(i) In respect of which a settlement amount has been remitted to the Chief Special Collector or

(ii) Which is Value Added Tax in respect of which a remittance has been made to the Chief Special Collector in accordance with Section 3(6)(a) and Sub-Paragraph B the individual has been given a Certificate as is referred to in Section 2(2) or 3(6)(c) in respect of such tax.

The individual shall produce to the Revenue Commissioners, the Collector-General or the Authorised Officers as the case may be within 30 days of (z) the date of making the demand or request or (ii) if later the date he received the certificate.

The evidence referred to in Section 2(4)(b) or Section 3(6)(c) as the case may be and the demand or request shall be withdrawn and the amount of tax specified in the demand or request shall be discharged

In my view it is clear that if the Defendant sets up, by way of defence, the 1993 Act it is incumbent upon him to produce to the Court the Certificate therein referred to. Until that is done no defence has been established. No Certificate is produced to the Court. Accordingly I reject this submission.

The Third Point

The issue that arises in this submission extends to a consideration of whether the appropriate procedure for the Defendant to adopt for an appeal from the assessment was the appeal procedure provided for by Section 933 of the Taxes Consolidation Act 1997 or alternatively Section 416 of the Income Tax Act 1967. This issue centred around a consideration of whether Section 1097 of the Taxes Consolidation Act 1997 which provided that in certain circumstances the obligation to make returns and furnish statements are deemed to come into force on the 6 April 1997 or whether the procedure provided for by Section 416 of the 1967 remained intact.

In the circumstances of the case I find it unnecessary to determine this issue because I am satisfied from the evidence before me that there has been a failure on the part of the Defendant to comply with either of these Sections.

Section 416, as has been referred to earlier in this Judgment enables a person aggrieved by an assessment to lodge an appeal with the Appeal Commissioners. There is no evidence before the Court that the Defendant took this step. Accordingly even if it be correct that the procedure provided for at Section 416 is the correct procedure, in my view, the Defendant has not complied with that procedure.

The Fourth Point

It is submitted on behalf of the Defendant that the provisions of Section 955(2)(a) of the Taxes Consolidation Act 1997 constituted a defence in this case.

This Sub-section provides "Where a chargeable person has delivered a return for a chargeable period and has made in the return a full and true disclosure of all material facts necessary for the making of an assessment for the chargeable period, an assessment for that period or an amendment of such an assessment shall not be made on the chargeable person after the end of the period of 6 years commencing at the end of the chargeable period in which the return is delivered and no additional tax shall be payable by the chargeable person and no tax shall be repaid to the chargeable person after the end of the period of 6 years by reason of any matter contained in the return.

Accordingly, it is claimed that the Defendant in this case is protected in respect of any claim dating back prior to 6 years from the date of the claim.

I am satisfied that this Section must be read as subject to Section 924 of the Taxes Consolidation Act 1997 which provides:

(1)(a) Where the inspector discovers that --

(i) any properties or profits chargeable to income tax have been omitted from the first assessments,

(ii) a person chargeable --

(I) has not delivered any statement

(II) has not delivered a full and proper statement

(III) has not been assessed to income tax, or

(IV) has been undercharged in the first assessments,

. . . or

(iii) a person chargeable has been allowed, or has obtained from and in the first assessments, any allowance, deduction, exemption, abatement or relief not authorised by the Income Tax Acts,

then, where the tax is chargeable under Schedule D, E, or F, the inspector shall make an additional first assessment.

I am satisfied that the circumstances envisaged by Section 924 exist in this case and accordingly the Defendant is not protected by the provisions of this Section.

I am accordingly satisfied that in approaching this case in a manner approved by the Supreme Court in First National Commercial Bank plc v England [1996] IR 75 the Defendant has not established to my satisfaction that he has any real or bona fide defence to be tried by the Court and accordingly I give Judgment for the Plaintiff in the amount of the claim.