Gladney v Daly

• Jurisdiction: Ireland
• Judge: Mr. Justice Robert Eagar
• Judgment Date: 19 May 2017
• Neutral Citation: [2017] IEHC 317
• Docket Number: [2015 No. 217 R.]
• Court: High Court
• Date: 19 May 2017

BETWEEN

MICHAEL GLADNEY

PLAINTIFF

AND

JAMES JOSEPH DALY

DEFENDANT

[2017] IEHC 317

Eagar J.

[2015 No. 217 R.]

THE HIGH COURT

REVENUE

Revenue – Assessment of tax – Liberty to enter final judgment – Value added tax – Dispute of facts – Appropriate remedy

Facts: The plaintiff had filed the present application seeking liberty to enter the final judgment for the specific amount together with the interest against the plaintiff in relation to the value added tax for the relevant period. The defendant objected to the assessment of tax made by the Revenue Commissioners.

Mr. Justice Robert Eagar held that the plaintiff was entitled to enter the final judgment against the defendant. The Court held that it was bound by the principle laid down by the Supreme Court in Michael Deighan v Hearne & others [1990] 1 I.R. 499 to the effect that where the applicant failed to appeal the dispute concerning the tax assessment made by the Inspector of Taxes; the Court had no power to intervene unless it was shown that the procedure followed by that inspector while making that assessment was ultra vires the statutory provisions. The Court found that the Inspector of Taxes had made a valid assessment for the relevant year and it was not appealed by the defendant, and thus, the defendant had no valid defence to the application filed by the plaintiff.

JUDGMENT of Mr. Justice Robert Eagar delivered on the 19th day of May, 2017

1 This is a judgment on an application by the Revenue to enter final judgment in the sum of €210,845.34 together with further interest on the principal sum of €169,062.00 at the statutory rate of 0.0274% per day or part day thereof in relation to value added tax from the 10th day of July, 2015 until judgment or part payment.

2 The notice of motion was grounded on the affidavit of Mary Hogan of the Office of the Revenue Commissioners, Collectors General Division. She states that she is an officer of the Revenue Commissioners. She says that despite demand, no sum whatsoever has been discharged on foot of the claim. She further says that she believes the defendant has no defence and that an appearance has been entered solely for the purpose of delay.

3 The second affidavit is that of James Joseph Daly, the defendant in the proceedings. He says that the claim brought by the plaintiff was referable to a six month period of trading from the 1st of July, 2012 to the 31st of December, 2012. He said that there was no detail whatsoever provided in the endorsement of claim as to how this figure is computed, and further the plaintiff's affidavit grounding the application provided no detail whatsoever as to the basis on which the sum is claimed, or computed, or the methodology for computation. He confirms the plaintiff's claim purports to relate to VAT liability on his part for the six month period to the 31st of December, 2012. He says that for the above trading period, his output value added tax on turnover was €85,871.00. Against this figure he had for that period inputs of €50,599.00, and he believes that his VAT liability for the period was the sum of €35,272.00. Total payment of €30,973.73 was paid to the Revenue for the period in question and he refers to his bank statement.

4 He says that his accountants, Large West Accountancy Services, have made several efforts to lodge the outstanding balance owing for the period of July to December 2012 using the Revenue on-line service but due to the estimate provided by the Revenue, the system would not allow him to file this return.

5 He says and believes that he is has an excellent record with the Revenue in relation to VAT liability accruing throughout the course of his business and he refers to a copy of his ROS Revenue Record.

6 He says that he is primarily involved in the buying and selling of machinery and has been so for a number of years. He is also involved in the buying and selling of second hand cars and to a lesser extent heavy machinery. He says that the principal sum claimed by the plaintiff in the amount of €169,062.00 in respect of VAT allegedly due is incorrect.

7 The next affidavit is the supplemental affidavit of Mary Hogan. She said that the Revenue Commissioners had conducted an investigation of the tax affairs of the defendant for the tax year 2012. She says that there was no cooperation with the investigation by the defendant or his agent, and that they failed to respond to numerous requests made by the Revenue Commissioners for books and accounts relating to the defendant's business. She states that the defendant failed to pay any returns for the VAT period the 1st of July, 2012 to the 31st of December, 2012 and in the absence of any return, an assessment was raised in the amount of €200,000.00. She says that this was notified to the defendant and his agent on the 5th of February, 2013 and she says that neither the defendant nor his agent made any appeal against the assessment within twenty-one days of the notice, and accordingly the sum disclosed in the notice of assessment is deemed to be final and conclusive. She says that in the absence of an appeal it is now not open to the defendant to seek to challenge or dispute the sum disclosed in the notice of assessment. She accepts that the defendant has made payments to the Revenue Commissioners in the sum of €30,937.73 and this has been credited to the defendant against the sum disclosed in the notice of assessment leaving a balance due and owing by the defendant to the plaintiff in the sum of €169,062.00, together with interest already accrued and continuing. She also says that the affidavit filed on behalf of the defendant fails to disclose any defence.

8 Exhibited with the supplemental affidavit of Mary Hogan is a notice of assessment of tax payable dated the 5th of February, 2013 in relation to VAT in the sum of €200,000.00. Attached to this notice there is a paragraph underneath the sum as follows:-

‘You may, if you claim that the amount due is excessive, on giving notice to me within a period of 21 days from the date of notification appeal to the Appeals Commissioners.’

9 The next affidavit is a supplemental affidavit of James Joseph Daly who says that the averments made in the supplemental affidavit of Mary Hogan are entirely inadequate and did not raise in any way the issues raised in his original affidavit of the 26th of November, 2015.

10 He said that the assessment appears to have no connection with the monies rightfully owing by him, and that such monies rightfully due and owing by him have been discharged in full save for the sum of €4,334.27. At the time he said that his VAT assessment was assessed by the plaintiff on a six monthly basis.

11 He further says in or around 2009 or early 2010, Niamh Smith of the plaintiff's office performed an audit of his tax affairs, that he had fully cooperated with Ms. Smith and that he had no further reports, engagements or queries from Ms. Smith. At that stage, he believed that all his tax affairs were fully in order. He says that the plaintiff's allegation that he had not been cooperative with the plaintiff is an untrue allegation. He says that on the 27th day of November, 2012 Bridie Kelly and Eamon Kenny of the plaintiff's office attended on him presumably for the purpose of an investigation into his tax affairs. This was within his six monthly return window wherein returns are required to be filed on the 19th of the month immediately after the VAT period. He says that he was not required to make any returns until the 19th of January and could not be deemed to be owing VAT at that time. He says that the plaintiff had levied an unattainable estimation of him personally in a premature manner.

12 A second supplemental affidavit was sworn by James Joseph Daly on the 23rd of November, 2016 which refers to the attendance by Ms. Kelly and Mr. Kenny of the plaintiff on the 27th of November, 2012. He said that Mr. Kenny wrote to him shortly after the meeting by letter dated the 3rd of December, 2012 stating that an estimate under s. 23 of the Valued Added Tax Act 1972 in...