Ross v C (W)
| Jurisdiction | Ireland |
| Judge | Miss Justice Laffoy |
| Judgment Date | 18 April 2008 |
| Neutral Citation | [2008] IEHC 103 |
| Court | High Court |
| Docket Number | No. 125 MCA/2007 |
| Date | 18 April 2008 |
AND
[2008] IEHC 103
THE HIGH COURT
Revenue - Law and practice on compromise - Whether payment constituted full and final settlement of respondent’s liability - Taxes Consolidation Act 1997, s. 908(5)(a) and (b)
Facts: The applicant, who was an inspector of taxes, sought orders against various banks in relation to accounts of the respondent tax payer held by them under paragraph (a) (for inspection of the books, records and other documents specified in relation to the accounts) and (b) (for the information, explanations and particulars specified in relation to the accounts) of subs. (5) of s. 908 of the Taxes Consolidation Act 1997. The basis on which the respondent resisted the application was that the matter in relation to his liability to tax which was being investigated by the applicant and which gave rise to the application had been compromised by virtue of the Revenue Commissioners having accepted and cashed a cheque given by the respondent to the applicant which it was contended was tendered in full and final settlement of the respondent’s liability.
Held by Laffoy J. in making an order in the terms sought by the applicant that on the basis of the undisputed facts the only inference which could be drawn was that there was no meeting of minds that acceptance of the cheque and receiving value for it by the Revenue Commissioners was in full and final settlement of the respondent’s liabilities so as to terminate the revenue review.
Reporter: R.W.
TAXES CONSOLIDATION ACT 1997 S908(5)(a)
TAXES CONSOLIDATION ACT 1997 S908(5)(b)
TAXES CONSOLIDATION ACT 1997 S908(3)
CODE OF PRACTICE FOR REVENUE AUDITORS PARA 6.2
FOSKETT LAW AND PRACTICE OF COMPROMISE 4ED 1996
FOSKETT LAW AND PRACTICE OF COMPROMISE 6ED 2005
BRITISH RUSSIAN GAZETTE & TRADE OUTLOOK v ASSOCIATED NEWSPAPERS 1933 2 KB 616
DAY & ANOR v MCLEA & ANOR 1889 22 QBD 610
STOUR VALLEY BUILDERS (A FIRM) v STUART & ANOR TLR 22.2.1993
MESPIL LTD v CAPALDI 1986 ILRM 373
delivered on 18th April, 2008.
On this application the applicant, who is an inspector of taxes, seeks orders against various banks in relation to accounts of the respondent tax payer held by them under paragraph (a) (for inspection of the books, records and other documents specified in relation to the accounts) and (b) (for the information, explanations and particulars specified in relation to the accounts) of subs. (5) of s. 908 of the Taxes Consolidation Act1997. It is common case that the applicant is an authorised officer within the meaning of s. 908 and the application is brought with the consent in writing of a Revenue Commissioner. It is also common case that the preconditions to bringing an application under s. 908, which are stipulated in subs. (3) thereof, have been complied with. The basis on which the respondent resists the application is that the matter in relation to his liability to tax which was being investigated by the applicant and which gave rise to the application has been compromised by virtue of the Revenue Commissioners having accepted and cashed a cheque given by the respondent to the applicant on 8th September, 2004, which it is contended was tendered in full and final settlement of the respondent's liability. In short, the respondent says that that matter is closed and cannot be re-opened.
The matter in question arose out of a voluntary disclosure made by a firm of accountants on behalf of the respondent on 15th November, 2001 in relation to so-called bogus non-resident accounts held by the respondent. Arising out of that disclosure, on 17th April, 2002 the respondent's accountants were notified that his disclosure had been selected for review by the Revenue Commissioners. There ensued through 2002, 2003 and into 2004 an investigation of the disclosure made by the respondent on the BNR1 form in November, 2001 and the respondent's participation in the 1993 amnesty.
The respondent had submitted to the Revenue Commissioners with the form BNR1 a cheque in the sum of €25,779.49 in respect of his total liability for underlying tax (income tax, PRSI and levies) and also his liability for interest and penalties in connection with the accounts disclosed thereon. In the course of the review, on 2nd October, 2003, the respondent's accountants furnished a cheque for €83,000 to the Revenue Commissioners by way of payment of taxes due per their revised workings. The review continued.
The starting point of the submissions made on behalf of the respondent that the matter is now closed is a meeting dated 26th July, 2004 between the respondent's then accountant (Mr. C) and the applicant. At that meeting Mr. C gave the applicant a further cheque for €17,808 in discharge of the respondent's liability on the BNR1 on the basis of Mr. C's revised workings. The respondent's case is that, at that meeting, on Mr. C's suggestion, the parties moved to a different mode of negotiation. Mr. C indicated that it would be his preferred option to agree a settlement in the case. The applicant indicated that he would consider any proposal made, but stated that it would have to be a reasonable figure and the ultimate approval would be by a revenue commissioner. There was a further meeting on 1st September, 2004 at which the respondent accompanied Mr. C. That meeting did not bring any resolution to the issues between the Revenue Commissioners and the respondent, although a further meeting was arranged for the following week, 8th September, 2004.
The respondent attended the meeting on 8th September, 2004 with Mr. C. The applicant's affidavit evidence on this application was based on a contemporaneous note he made of that meeting which recorded what happened as follows:
"Mr. [C] said that he would prefer to settle the case without any further correspondence and wanted to agree on a final liability. I said I was prepared to listen to any offer, but could not guarantee final acceptance at this meeting. Both [the respondent] and Mr. [C] accepted this.
Mr. [C] said that he had revised workings in this case, and that he had increased the interest and penalties due. He preferred to agree the case without my seeing these workings and said his calculations showed a total liability of €400,000. His records showed that [the respondent] had already paid €122,000, leaving a balance of €278,000 due. [The respondent] gave me a cheque for this amount. I agreed to put his proposal forward, but again stressed that even though I was taking the cheque, they should not assume final acceptance of their offer."
The code of practice applicable to settlements by the Revenue Commissioners in operation at the time provided that settlements in excess of €100,000 had to be approved by one of the three Revenue Commissioners. The applicant has asserted that Mr. C, a tax adviser of longstanding and experience, would have been fully aware of that requirement.
The respondent's account of the meeting on 8th September, 2004 on affidavit is as follows:
"I put my best foot forward and accepted a total liability of €400,000. I believed that my precise liability may have been more or less than that but not by so much and I wanted the matter closed. The applicant stated that he too wanted the matter settled. I presented the applicant with a cheque for the balance of the said sum of €400,000 (i.e. €278,000) in full and final settlement of my liability which he accepted subject to the approval of his manager whom the applicant stated would have to approve the compromise. I am in no doubt that the agreed intention of all parties at that meeting was to achieve a final compromise and that the procedure agreed between us was that the applicant would transmit the cheque to his superior with a recommendation that it be accepted in settlement of the liability and that his superior had authority to conclude a final compromise. … The applicant stated that he did not have the authority to compromise the matter but that he would recommend to his manager … who would have to approve his recommendation for it to be accepted and he did not see any difficulties with [the manager] accepting it."
Mr. C has also put his account of his dealings on behalf of the respondent with the applicant on affidavit. He has averred that at the meeting on 1st September, 2004 "we all agreed that it would be mutually beneficial to settle the case".
As to the basis on which the applicant accepted the cheque for €278,000 at the meeting of 8th September, 2004, he has averred as follows:
"… I agree with the applicant when he avers that he left us in no doubt that he could not approve the settlement himself. He stated clearly that he could not do so and that it was up to his manager to make the decision as to whether or not to accept the compromise but that the applicant would relay to us the decision of his principal in regard to the settlement and that the applicant was authorised to communicate this decision to us in due course."
On 8th September, 2004 the applicant referred the matter up the line to his superiors. On the following day the District Manager of the area contacted him and stated that he could not consider the offer without a detailed submission from the tax agent,...
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