Liam Liston v G. O'C. and A. O'C

• Jurisdiction: Ireland
• Judge: Keane J.
• Judgment Date: 22 May 1996
• Neutral Citation: 1996 WJSC-SC 1585
• Court: Supreme Court
• Docket Number: [1995 No. 240R],No. 240 R/1995
• Date: 22 May 1996

LISTON

REVENUE

IN THE MATTER OF SECTION 18 OF THE FINANCE ACT 1983

AND

IN THE MATTER OF G.O'C

AND

IN THE MATTER OF A.O'C

1996 WJSC-SC 1585

No. 240 R/1995

69/96

THE SUPREME COURT

Synopsis:

BANKER

Information

Disclosure - Compulsion - Customer - Accounts - Transactions - Requirement of inspector that taxpayer delivers return of income - Absence of proof of express requirement - Prior statute provided that requirement shall be deemed to have been made if tax payer delivers return in prescribed form - Application of statutory presumption to later enactment did not involve unjust, anomalous or absurd result - Inspector's application to High Court for order directing bank to furnish information - (69/96 - Supreme Court - 22/5/96) - [1996] 1 IR 501

|Application of Liston|

REVENUE

Income tax

Taxpayer - Bank - Account - Transactions - Disclosure - Powers of inspector of taxes - Application by inspector to High Court for order directing bank to furnish details of taxpayer's account and transactions - Precondition to application - Requirement that taxpayer deliver return of income - Enactment deemed such requirement to have been made where taxpayer delivers return of income - Whether inspector had reasonable grounds for making such application - Rules of the Superior Courts, 1986 (S.I. No 15), order 68, r. 17 - Income Tax Act, 1967 (No. 6), s. 172 - Finance Act, 1983 (No. 15), s. 18 - (69/96 - Supreme Court - 22/5/96

|Application of Liston|

WORDS AND PHRASES

"Deemed to have been required"

Enactment - Interpretation - Effect - Obligation - Creation - Requirement of inspector that taxpayer delivers return of income - Absence of proof of express requirement - Prior statute provided that requirement shall be deemed to have been made if tax payer delivers return in prescribed form - Application of statutory presumption to later enactment did not involve unjust, anonalous or absurd result - (69/96 - Supreme Court - 22/5/96)

|Application of Liston|

Citations:

FINANCE ACT 1983 S18

CUSTOMS ACT 1956 S3

RSC O.68 r17

FINANCE ACT 1983 S18(3)

INCOME TAX ACT 1967 S172(4)

INCOME TAX ACT 1967 S542(2)

FINANCE ACT 1975 S25

O'C V PCD & A BANK 1985 IR 265

INCOME TAX ACT 1967 S174

INCOME TAX ACT 1967 S172

INCOME TAX ACT 1967 S169

INCOME TAX ACT 1967 S174(1)

REVENUE COMMISSIONERS V METROLANDS FINANCE LTD 1981 STC 195

MARSHALL (INSPECTOR OF TAXES) V KERR 1993 STC 360

FINANCE ACT 1983 S18(2)

INCOME TAX ACT 1967 S172(1)

1 22nd day of May, 1996 by Keane J. [nem diss]

2 This is an appeal from a Judgment and Order of the President of the High Court declining to vary or discharge an Order made by him under Section 18 of the Finance Act 1983 on the 20th December 1995. That Order required Allied Irish Banks plc to furnish the Applicant, Liam Liston, an Inspector of Taxes (hereinafter "the Inspector"), with particulars of all accounts maintained by G.O'C and/or A.O'C (hereinafter sometimes referred to as "the Taxpayers") in the Edward Street, Newbridge Branch of Allied Irish Bank plc during the period from the 20th December 1985 to the 31st March 1988. The Order also required them to furnish to the Inspector details of all lodgments and withdrawals made into or out of the accounts (if any) during that period, any interest earned on the accounts for that period and any mandates or other instructions in relation to the operation of the accounts. The Order applied in the same terms to the Bank of Ireland in respect of their branch at The Square, Kildare.

3 The factual background to the application is as follows. Mr. and Mrs. O'C live at a stud farm in County Kildare and are jointly assessed for income tax purposes. Mr. O'C worked as a bank official until he retired on the 15th February 1971 and became manager of a stud farm in County Cork which opened as a public stud in that year and subsequently became part of a larger and well-known stud. In July/August 1973, he bought a small stud farm in County Cork for £48,000 and from April 1974 carried on his own thoroughbred breeding business at that stud.

4 He and Mrs. O'C, whom he married in 1976, elected to be assessed on income tax on the national basis pursuant to S.21 of the Finance Act 1974. On the 6th April 1980, the farming business was transferred to a company owned and controlled by Mr. and Mrs. O'C and called M.E. Limited. (I have abbreviated the name of the company to preserve the Taxpayers" anonymity.) The returns made by that company for corporation tax purposes indicated that it had made overall losses from the period from 1st April 1980 to 31st March 1989. During that period, according to the income tax returns made by Mr. O'C, no distributions were made to him from the company.

5 On the 6th November 1981, Mr. O'C purchased the stud farm where he at present resides with Mrs. O'C for the sum of £950,000 including stamp duty and other costs.

6 On the 16th January 1986 Mr. and Mrs. O'C were stopped by Irish customs officers while crossing the border into Northern Ireland and were found to have in their possession £500,000 in twenty pound notes. This cash was seized by the customs and excise authorities and subsequently returned by them to Mr. and Mrs. O'C subject to a deduction of £30,000. This followed the institution by the Revenue Commissioners of criminal proceedings under S.3 of the Customs Act 1956which were disposed of summarily on a plea of guilty by Mr. O'C and of civil proceedings which were compromised on the basis of the deduction of £30,000 from the sum seized.

7 Although this matter was dealt with by the Customs Section of the Revenue, it came to the notice of the Investigation Branch of which the Inspector is a senior member. That branch had also been informed by the inspectors dealing with Mr. and Mrs. O'C's tax affairs that they appeared to have substantial assets which, it was thought, could not be accounted for by the income shown on the returns of income made by them. On the advice of the Investigation Branch, the Inspector concerned wrote to Mr. O'C's then agents, Messrs. J.S. McElroy & Company on 30th May 1986 asking to see statements of affairs as of the 31st March 1970 and 31st March 1986 together with details of bank accounts held in the names of Mr. and Mrs. O'C and their children. He also asked for the outstanding return of income for 1985/86 and for details in relation to deposit interest. In his affidavit grounding the application before the President, the Inspector said that, while the return of income was ultimately delivered, no substantive reply was ever received to that letter. However, Mr. Hugh Nolan, a Chartered Accountant in Naas, who had replaced Messrs. J.S. McElroy & Company as Mr. and Mrs O'C's tax adviser, said that on 2nd February 1989 he had seen Mr. Gerard Stack, an official in the Revenue Commissioners, and had given him a written statement on Mr. O'C's tax affairs in report form. The Inspector in a further affidavit said, that, while he had that report on file, Mr. Stack had informed him that he had no recollection of having dealt with Mr. O'C's affairs and that, in any event, the requirement that bank accounts should be furnished had not been compiled with.

8 In his grounding affidavit, the Inspector said that on the 11th April 1991 he received a telephone call from what he described as a "confidential source". The source told him that Mr. O'C had "very substantial assets outside the country" mainly in the United Kingdom and the United States and that, in this regard, it would be useful for Mr. Lisbon to examine an account or accounts in the Newbridge branch of Allied Irish Banks. The source also stated that most of Mr. O'C's income was derived, not from farming, but from horse dealing involving both thoroughbreds and some non-thoroughbreds. This informant said that Mr. O'C had made one million pounds from a single transaction and that the £500,000 seized by the Customs on the 16th January 1986 was Mr. O'C's money and did not belong to somebody else, as Mr. O'C claimed. The source also said that, when the money was returned to Mr. O'C by the customs authorities, he gave it to people to whom he alleged it belonged abroad and they gave it back to him by lodging it into accounts abroad for Mr. O'C. The Inspector said that this informant stated that he would provide him with "full and further information" in due course.

9 Four days later, on 15th April 1991, an envelope was left at the office of the Investigation Branch marked for the attention of the Inspector. It contained a photocopy of a single type written sheet which was exhibited with the Inspector's affidavit. The document contains no indication as to its author or, save indirectly, to whom it was addressed, but it clearly forms part of advice being given by a tax adviser to a client. Having set out some dates and figures, the writer goes on

"As it is quite clear from your bank accounts that you have been carrying on personally a bloodstock breeding business and perhaps a bloodstock dealing business, as distinct from M. E. Limited, it is essential that you obtain copies of your accounts with Tattersalls and any other sales company with which you have dealt personally since 31st March 1980 to date so that they can be analysed in detail and that accounts can be prepared for that business. From the information available it appears that it will be quite difficult to prepare such accounts, as details of all lodgments and cheques do not appear to be available. It will also be necessary to analyse lodgments and cheques as between matters that relate to stallion shares which you own and income from these shares, as distinct from taxable bloodstock activities. There is also the problem of your syndication of stallions such as "Burslem" where your profit from the transaction would appear to have been the market value of two free shares...."

10 The writer goes on to set out details of bank accounts...