An Inspector of Taxes v A Firm of Solicitors
| Jurisdiction | Ireland |
| Judge | Mr. Justice Moriarty |
| Judgment Date | 21 February 2013 |
| Neutral Citation | [2013] IEHC 67 |
| Court | High Court |
| Date | 21 February 2013 |
BETWEEN
AND
[2013] IEHC 67
THE HIGH COURT
REVENUE LAW
Disclosure
Application for order directing provision of information and documentation relating to financial transactions - Investigation into use of off shore bank accounts - Whether reasonable grounds for suspecting tax payers failed to comply with tax code - Whether any failure liable to cause serious prejudice to assessment or collection of tax - Whether material sought relevant to proper assessment or collection of tax - Client confidentiality - Legal professional privilege - Interpretation of statutory provision - Application limited to identities of parties - Duty of confidentiality - Public interest - Balancing of rights - Menolly Homes Limited v Appeal Commissioners [2010] IEHC 49, (Unrep, Charleton J, 26/2/2010); Viera v Revenue Commissioners [2009] ITR 141 and Miley v Flood [2001] IR 50 considered - Taxes Consolidation Act 1997 (No 39), s 902A - Application granted (2012/154MCA - Moriarty J - 21/2/2009) [2013] IEHC 67
Inspector of Taxes v A Firm of Solicitors
Facts: The applicant was the manager of the Offshore Assets Group of the Revenue Commissioners who sought disclosure of certain information regarding 19 transactions made through two bank accounts in the name of the respondent pursuant to s. 902A of the Taxes Consolidation Act 1997. The application was made to help further an investigation as to whether offshore bank accounts had been used to avoid tax implications in Ireland.
The respondent argued that the applicant had been unable to demonstrate reasonable grounds for suspecting that they had failed to comply with the provisions of the Tax Code, that the failure had prejudiced a proper assessment of tax owed and whether the information sought was relevant to the proper assessment of tax obligations. They also expressed their concerns over possible breaches of confidentiality to their clients and of legal professional privilege.
Held by Moriarty J that s. 902A of the Taxes Consolidation Act 1997 had been carefully drafted so that an authorised officer or inspector of the Revenue Commissioners could only make an application for disclosure where they were satisfied that they had reasonable grounds to suspect statutory tax obligations had not been complied with, that the non-compliance was likely to prejudice a proper assessment of tax and that the information sought was relevant to the proper assessment of tax. An application could also only be made when the written consent of a Revenue Commissioner was obtained. It was therefore clear that a system of checks and balances of the power was in place before an application was even brought before the court. On consideration of evidence put before the court and the low threshold needed to establish reasonable grounds of suspicion, it was held that the applicant had successfully complied with this obligation.
In relation to the respondent”s second argument, it was held that the information sought was limited to the names and addresses of parties to the transaction and/or the ultimate beneficiaries of the monies referred to in each of the transactions in issue. There would therefore be little risk of breaches of confidentiality or legal professional privilege if the application was approved.
Order for disclosure made.
TAXES CONSOLIDATION ACT 1997 S902A
TAXES CONSOLIDATION ACT 1997 S902A(7)
TAXES CONSOLIDATION ACT 1997 S908
MENOLLY HOMES LTD v APPEAL CMRS & REVENUE CMRS UNREP CHARLETON 26.2.2010 2010/33/8385 2010 IEHC 49
VIERA LTD v REVENUE CMRS 2009 ITR 143 2009/57/14565 2009 IEHC 431
MILEY v JUSTICE FLOOD (PLANNING TRIBUNAL) 2001 2 IR 50 2001 1 ILRM 489 2003/36/8641
WALSH v NATIONAL IRISH BANK LTD 2008 2 ILRM 56 2007 ITR 99 2007/59/12726 2007 IEHC 325
JUDGMENT of Mr. Justice Moriarty delivered on the 21st day of February, 2013
1. The applicant in this matter, who is the Manager in charge of the Offshore Assets Group in the Revenue Commissioners, seeks an order pursuant to s. 902A of the 1997 Taxes Consolidation Act from the respondent in respect of certain specified information and documentation regarding 19 transactions effected through two bank accounts in the name of the respondent. It is the final sub-section 7 of s. 902 A, providing that applications under the section shall be held in camera which gives rise to the somewhat Delphic title, the application having been commenced under the actual names of the parties, but having by agreement been amended to accord anonymity, at the conclusion of the hearing, on 5 th December last.
2. This application is part of the extensive and long-running investigation by Revenue into the use of offshore bank accounts by Irish residents, and for the recovery of taxes evaded by operation of those accounts, which has been widely publicised in recent years, featuring prominent newspaper notification, initial partial amnesty arrangements, and significant tax yields. In the course of that exercise, Revenue have already obtained High Court orders under s. 908 of the 1997 Act, directing financial institutions to furnish particular documents and information relevant to that investigation, which in the present instance elicited information relating to two accounts held in the name of the respondent at a substantial branch of a leading Irish bank, which are the office account and the client account of the respondents. The specific relief sought in this application refers to documents and information relating to such 19 transactions within those accounts, over the years 2005 - 2007, involving, on the one hand, four corporate entities, an individual and an individual couple and on the other hand, certain financial institutions located in the Isle of Man, Guernsey, Lichtenstein, Switzerland and Jersey. It appears that prior applications have been successfully sought from the High Court by Revenue under s. 902A in respect of third parties such as insurance companies, but that this is the first instance of such relief being sought against a firm of solicitors. This factor, involving as it does the element of legal professional privilege and other relevant aspects, has given rise to a considerable measure of differences between the parties, reflected in two affidavits on each side, extensive documentation exhibited, and argument in the course of the hearing.
3. The focus of the argument was primarily upon three issues, each addressed in the wording of section 902A. Firstly, the respondent contended that the applicant had failed to demonstrate the requisite reasonable grounds for suspecting that the tax payers in question may fail or have failed to comply with the provisions of the Tax Code, that such failure was likely to occasion serious prejudice to the proper assessment or collection of tax, and that what was contained in the material sought in the application was relevant to the proper assessment or collection of tax. Secondly and thirdly, the respondent raised concerns over both confidentiality to clients, and legal professional privilege, each in the context in which these matters were referred to in s. 902A aforesaid.
4. The preponderance of the argument at the hearing was directed to the first of these matters. Before addressing what was stated, I feel it is appropriate to refer to my own initial appraisal of the section in this regard, the wording of which conveniently fits into two pages, which are set forth in an Appendix immediately following the judgment.
5. The section, it seems to me, has been carefully drafted to incorporate its own checks and balances, in such a fashion as to equate the interest and duty of Revenue in obtaining from third parties designated documentation or information relating to tax payers, while providing against oppressive or capricious use of any entitlement conferred. These cheques are both internal and external, as regards the authorised officer or tax inspector in any particular case. Initially, he or she must only make application if satisfied:-
(a) that reasonable grounds exist for suspecting that the taxpayer or taxpayers in relevant investigation may have failed or will fail to comply with statutory tax obligations;
(b) that any such failure is likely to entail serious prejudice to the proper assessment or collection of...
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