DPP v Slattery
| Jurisdiction | Ireland |
| Judge | Mr. Justice Edwards |
| Judgment Date | 20 March 2017 |
| Neutral Citation | [2017] IECA 90 |
| Docket Number | Record No. 184 & 185 CJA/15 |
| Court | Court of Appeal (Ireland) |
| Date | 20 March 2017 |
[2017] IECA 90
THE COURT OF APPEAL
Edwards J.
Birmingham J.
Mahon J.
Edwards
Record No. 184 & 185 CJA/15
IN THE MATTER OF SECTION 2
OF THE CRIMINAL PROCEDURE ACT 1993
AND
Sentencing – Knowingly or wilfully delivering an incorrect return in connection with Value Added Tax – Undue leniency – Applicant seeking review of sentences – Whether sentences were unduly lenient
Facts: The respondents, Mr J Slattery and Mr W Slattery, each pleaded guilty to four counts involving various offences contrary to the Taxes Consolidation Act 1997, each count of which carried a potential maximum sentence of five years imprisonment. In each case the charges, which related to specified time periods, comprised two counts of knowingly or wilfully delivering an incorrect return in connection with Value Added Tax, one count of claiming a repayment of tax to which there was no entitlement and one count of failing to keep for the period of time specified by law records of all transactions relating to Value Added Tax. On the 18th of June 2015 the respondents were both sentenced to three years imprisonment, to be suspended for a period of three years. The applicant, the DPP, applied to the Court of Appeal seeking a review of those sentences on the grounds that they were unduly lenient. The DPP submitted that the sentencing court, when sentencing the respondents, erred in principle in: (a) failing to identify an appropriate starting point at a sufficiently high level to reflect the nature of the said offences and the aggravating factors in the case; (b) failing to reflect in the said sentences the level of culpability of the respondent; (c) failing to reflect in the said sentences the aggravating factors.
Held by the Court that the suspension of the entirety of the term was to give excessive discount for mitigation. The Court agreed that it represented an excessive discount for mitigation, a clear divergence from the norm and an error of principle. The Court proceeded to sentence the respondents.
The Court held that it would impose the contemplated sentence of three years imprisonment on the respondents, but would suspend all but final eight months of that sentence upon the respondents each respectively entering into a bond in the sum of €100 to keep the peace and be of good behaviour for a period of eighteen months.
Appeal allowed.
The respondents each pleaded guilty to four counts involving various offences contrary to the Taxes Consolidation Act, 1997, as amended, each count of which carried a potential maximum sentence of five years imprisonment. In each case the charges, which related to specified time periods, comprised two counts of knowingly or wilfully delivering an incorrect return in connection with Value Added Tax, one count of claiming a repayment of tax to which there was no entitlement and one count of failing to keep for the period of time specified by law records of all transactions relating to Value Added Tax.
On the 18th of June 2015 the respondents were both sentenced to three years imprisonment, to be suspended for a period of three years. The Director now seeks a review of those sentences on the grounds that they are unduly lenient.
The respondents, a father and son, were directors of Slattery Ventures Limited (‘the company’). The company carried on trade which was subject to VAT and became registered in respect of VAT on the 5th September, 2005. The company owned fast food outlets at a number of locations in Limerick City and County, including at Ballycummin Village, Raheen, Co Limerick and at The Racefield Centre, Father Russell Road, Dooradoyle, Limerick, as well as a retail premises comprising a garage and shop in the village of Clarina, Co Limerick.
In 2008, the company was selected for a revenue audit on account of not having registered for the plastic bag levy. On the 11th of February 2008, the Revenue Commissioners issued a letter to the company advising it that it had been selected for a revenue audit.
Mr. Tony Ryan, a Higher Executive Officer at the Revenue Commissioners conducted the audit. On the 29th of April 2008 Mr. Ryan met with the respondents. At that point they opted not to make a voluntary disclosure. A number of irregularities were identified by Mr. Ryan.
First, there were issues relating to the ‘z read’ – a feature of modern tills whereby a report is produced detailing the total sales for a particular day or shift. Once a ‘z read’ report is produced for a particular day or shift the cash register resets the ‘z-read’ counter to zero for the commencement of the next day or shift. Modern electronic cash registers also have a feature known as the Non Resettable Gross Total (NRGT) function which maintains a running total of all sales which can be accessed at any time. However, it is technically possible for a person with the requisite ‘know how’ to disable the NRGT function.
The company's record keeping appears to have been chaotic. When asked for the company's records, Mr. Ryan was simply presented with two cardboard boxes filled with these ‘z reads’. On going through them Mr. Ryan discovered a pattern of ‘skipping every second z read’ from the till at the Ballycummin premises, resulting in a significant amount of cash receipts not being recorded, incorrect sales figures consequently being entered on VAT returns and less VAT being remitted to the Revenue Commissioners than was in fact due.
The cash register in use at the Ballycummin premises was a brand new cash register acquired in early September 2006. For approximately the first seven weeks during which this new cash register was in use, the NGRT function was operating. Thereafter it appears to have been deliberately disabled.
In respect of the period from the 11th of September, 2006 to the 30th of October, 2006, during which time the NGRT was operational, it was observed that cumulative sales were €113,212.40 but the ‘daily Z readings’ for the same period only totalled €83,626.16.
The prosecution case is that the practice of skipping every second z read continued for at least several two-month VAT periods thereafter and that the disablement of the NGRT function was a deliberate attempt to ensure that there was no running total recorded which could be compared with the figures actually returned.
In addition, there was exceptionally poor record keeping overall. There were VAT accounting periods where no returns were made for the Clarina premises at all, and there were periods where sales at the Clarina premises were underreported by significant sums, and although a note was put into the records that VAT due for the Nov-Dec 2005 VAT period would be returned in VAT return for the Jan-Feb 2006 VAT period, that never in fact occurred. VAT was significantly underpaid in respect of the Clarina operation.
In addition, there was significant inaccurate recording in, and lack of adequate supporting documentation in respect of, the purchases book. The purchases book was initially believed to be overstated by as much €144,343.40. However, documentation subsequently produced by the respondent's accountant suggested a possible eventual under-claim of as much as €29,000. However, regardless of this, no legitimate reclaim could have been made by the company in the periods in question given the concealment of large amounts of sales.
A figure of €223,965 representing the estimated losses to the Revenue in the periods covered by the indictment was given in evidence. This breaks down into €112,253 in the case of Mr. Jonathan Slattery based on the returns that he signed, and €111,112 in the case of Mr. William Slattery based on the returns that he signed. The estimated outstanding liability of €223,965 was over and above the sum of €70,000 already recovered by the Revenue Sherriff.
The prosecution case is that while the VAT liabilities/ irregularities arising in respect of Racefield premises and the Clarina premises might be explicable, at least in part, by poor record keeping, poor financial management and poor corporate governance, the VAT liabilities and irregularities arising at the Ballycummin premises were more sinister and involved premeditated and deliberate fraud. In regard to the latter, significant emphasis was placed on the fact that substantial monies, including VAT, received by the company were lodged to the respondents' personal bank accounts.
Between September 2005 and April 2008, €1,254,267.37 was lodged to the second respondent's personal account. During the same period, €112,966.83 was lodged to the first respondent's personal account.
The respondents provided only very limited co-operation in the course of the revenue investigation. They made no admissions at interviews, and did not avail of the opportunity afforded to them to make voluntary disclosures.
There was a relatively lengthy period between the initial audit, and the conclusion of the proceedings in the court below. The audit was carried out in 2008, the respondents were not charged until 2012, the respondents pleaded guilty in 2014 and sentencing did not occur until June 2015.
In addition, this Court notes a further twenty months was allowed to elapse before this appeal was brought on for hearing.
At the time of sentencing, the second named respondent, Mr. William Slattery, was aged 62 years, and was a married father of six adult children who had worked all his adult life. His son, the first named respondent, was a 35 year old father of one young child who had a long term partner. Neither respondent had any previous...
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DPP v D. W
...this Court in People (Director of Public Prosecutions) v Floyd [2014] IECA 39 and in People (Director of Public Prosecutions) v Slattery [2017] IECA 90. 39. In the first edition of his now seminal work on Sentencing Law and Practice, which predated the enactment of s. 99 of the Criminal Jus......