Ross v Cohalan

JurisdictionIreland
JudgeMr. Justice Michael White
Judgment Date15 May 2014
Neutral Citation[2014] IEHC 686
CourtHigh Court
Date15 May 2014

[2014] IEHC 686

THE HIGH COURT

[No. 56 MCA/2013]
Ross v Cohalan
REVENUE

BETWEEN

GEORGE ROSS
APPLICANT

AND

MAURICE COHALAN
RESPONDENT

TAXES CONSOLIDATION ACT 1997 S1077B(3)

TAXES CONSOLIDATION ACT 1997 S1086

TAXES CONSOLIDATION ACT 1997 S1077B

WILEY v REVENUE CMRS 1994 2 IR 160 1993 ILRM 482 1992/4/1204

TOBIN v FOLEY (ORSE DALY) UNREP PEART 22.11.2011 2011/47/13392 2011 IEHC 432

STOUR VALLEY BUILDERS v STUART 2003 TCLR 8

BRACKEN v BILLINGHURST 2004 TCLR 4 2003 AER (D) 488 (JUL) 2003 EWHC 1333 (TCC)

MESPIL LTD & ARAMAIC LTD v CAPALDI & BOWES 1986 ILRM 373 1986/4/1244

GLENCAR EXPLORATIONS PLC & ANDAMAN RESOURCES PLC v MAYO CO COUNCIL (NO 2) 2002 1 IR 84

PRIMOR PLC v STOKES KENNEDY CROWLEY & OLIVER FREANEY & CO 1996 2 IR 459 1995/20/5287

EUROPEAN CONVENTION ON HUMAN RIGHTS & FUNDAMENTAL FREEDOMS ART 6

EUROPEAN CONVENTION ON HUMAN RIGHTS ACT 2003

JUSSILA v FINLAND 2009 STC 29 2007 45 EHRR 39 2006 ECHR 996

FORTUNE v REVENUE CMRS UNREP O'NEILL 23.1.2009 2009/22/5366 2009 IEHC 28

RAINSFORD v LIMERICK CORP 1995 2 ILRM 561 1981/7/1121

MCBREARTY v NORTH WESTERN HEALTH BOARD & ORS UNREP SUPREME 10.5.2010 2010/31/7749 2010 IESC 27

O DOMHNAILL v MERRICK 1984 IR 151 1985 ILRM 40 1984/5/1593

TOAL v DUIGNAN & ORS (NO 1) 1991 ILRM 135 1987/8/2248

TOAL v DUIGNAN & ORS (NO 2) 1991 ILRM 140 1990/8/2334

TAXES CONSOLIDATION ACT 1997 S1063

TAXES CONSOLIDATION ACT 1997 S1053

TAXES CONSOLIDATION ACT 1997 S1053(4)

TAXES CONSOLIDATION ACT 1997 S1053(1)

TAXES CONSOLIDATION ACT 1997 S1053(2)

Revenue – The Tax Consolidation Act 1997 – Voluntary disclosure of undisclosed funds – Inordinate and inexcusable delay – Fair procedures – Imposition of tax – Doctrine of legitimate expectation

Facts: The applicant being an officer of the Revenue Commissioners sought an order to determine tax liability of the respondent pursuant to a voluntary disclosure scheme. The respondent contended that his tax affairs were ceased by virtue of the applicant having accepted the cash under the terms of a letter and on account of inordinate delay.

Mr. Justice Michael White refused to grant an order to the applicant. The Court held that the Revenue Commissioner was under a statutory obligation to put in place schemes for tax collection and offer incentives, and any unilateral offer for payment and calculation of taxes even after the cheque had been received would not amount to a concluded contract. The Court observed that for establishing legitimate expectation, there must be a representation by the public authority addressed directly or indirectly to identifiable groups of persons so as to create an expectation that such authority would abide by its representation. The Court held that the doctrine of legitimate expectation had no application in the subject case as the respondent was never entitled for the tax scheme and he was not offered to participate in the scheme. The Court pointed out that its power to grant a relief on account of delay was discretionary and it should be inexcusable delay. The Court even after establishing delay could grant the relief provided so as not to cause unfairness to the other party. The Court found that there was unexplainable delay in the subject case and it had caused unfairness to the respondent.

1

1. The applicant an officer of the Revenue Commissioners has applied by originating notice of motion for an order pursuant to s. 1077B(3) of the Taxes Consolidation Act 1997, to determine whether the respondent is liable to a penalty under the Taxes Consolidation Act 1997, by reason of having negligently submitted an incorrect and incomplete voluntary disclosure to the Revenue Commissioners Offshore Assets Group in relation to the respondent's Bank of Ireland Treasury Trust and/or in the alternative to the Revenue Commissioner's underlying tax (insurance products) project. The applicant seeks to have the amount of penalty determined if the respondent is so liable. The application was heard on 12 th and 13 th February, 2014, and judgment was reserved.

2

2. The respondent is a business man and was liable to make returns to the Revenue Commissioners in respect of income.

3

3. The court has already ruled in the course of the hearing that the applicant was entitled in his affidavits to exhibit various correspondence and extracts from the respondent's file and to do so did not breach the rule against hearsay.

4

4. The evidence for the most part is undisputed. The respondent's financial advisers, Price Waterhouse Coopers wrote to the Inspector of Taxes on 30 th May, 2003, notifying the inspector that having been made aware by the Bank of Ireland Trust Company (Jersey) Limited of the voluntary disclosure provisions in the Revenue Audit Code of Practice 2002, that they wished to make a qualifying disclosure on any outstanding tax liabilities arising on behalf of Mr. Cohalan inaccurately referred to in the letter as Coughlan. This related to the operation of the Glenbrook Trust.

5

5. By further letter of 29 th September, 2003, Price Waterhouse Coopers on behalf of the respondent acknowledged that funds introduced into the trust were untaxed professional earnings, apart from I.R£40,000. The total liability was calculated including a penalty of 5% at €289,996 of which €70,000 had already been paid and a cheque for the balance of €219,996, was forwarded to discharge the balance.

6

6. Subsequently on the 16 th August 2004, the respondent signed a declaration that to the best of his knowledge, information and belief that all statements he made in this disclosure were correct and complete.

7

7. On 20 th May, 2005, Myles C. Ronan and Associates, Accountants, wrote to the Revenue Commissioners indicating notice of intention to make a qualifying disclosure relating to a life assurance product. A notice of intention to make a qualifying disclosure of a tax default relating to a life assurance product was signed by the respondent on 19 th May, 2005.

8

8. By letter of 22 nd July, 2005, Myles C. Ronan and Associates, wrote to the Revenue Commissioners enclosing a cheque for €157,865, stating that this payment was made in full and final settlement of their client's liabilities for tax interest and penalties consequent upon the assurances given in relation to investments in single premium insurance products and on the basis that their client received the fall benefit of the voluntary disclosure in respect of the mitigation of penalties, non-disclosure and non-prosecution.

9

9. The letter further stated:-

"The payment is made on the basis that it is accepted in full and final settlement of all tax interest and penalties arising by reason of our client's investment in the said products and on the basis that there is to be no publication pursuant to s. 1086 of the Taxes Consolidation Act 1997 and that no prosecution will arise."

10

10. The respondent prepared a disclosure and statement of amounts due. The statements set out the particulars of the life assurance products held.

11

11. The cheque for the sum of €157,865, was cashed by the Revenue Commissioners.

12

12. The respondent did not receive any response to the letter from his advisers, until 18 th January, 2007, when J. Fitzpatrick Principal Officer, wrote to them referring to the correspondence of 21 st July, 2005, and queried the calculations.

13

13. Myles C. Ronan and Associates replied on 23 rd January, 2007, explaining the nature of the investment by the respondent. This was followed by a further letter from Myles C. Ronan and Associates setting out each policy.

14

14. It transpires that under the scheme which was titled "Voluntary Disclosure of Undisclosed Funds Invested in Life Assurance Products" that there were certain conditions which had to be satisfied to allow a tax payer to be eligible.

15

15. The eligibility conditions were that:-

· "· the treatment of disclosure and payment set out in Part II of this disclosure scheme will apply where the person making the disclosure and payment is not currently under Revenue Investigation;

· has fulfilled not later than 22 nd July, 2005, the calculation, disclosure and payment conditions set out in this leaflet; and

· does not come within the excluded categories of holders of bogus non-resident accounts, Ansbacher and NIB/CMI inquiry cases and persons previously required to make a disclosure relating to an offshore financial product."

16

16. By letter of 9 th March, 2007, the office of the Revenue Commissioners wrote to Myles C. Ronan and Associates, noting that the respondent had previously made a settlement under the offshore assets campaign which now appeared to be incomplete as it did not include figures subsequently declared in the single premium investment products investigations. The letter noted that accordingly, there were increased penalties due totalling €166,098. It was also noted that as the terms for both campaigns were not met publication would also arise. Myles C. Ronan and Associates replied on 26 th April, 2007, stating

"Having cashed the cheques, it is not open to the Revenue now to seek additional interest, penalties or impose publication or seek to prosecute our clients."

17

17. Pursuant to s. 1077B of the Taxes Consolidation Act 1997, when there is no agreement on a penalty, there is a responsibility on the Revenue Officer to issue an opinion as to liability to a penalty.

18

18. Subsequent to the letter of 26 th April, 2007, to the Revenue Commissioners disputing the request for a penalty, there was no further correspondence until the relevant opinions were issued on 14 th May, 2010. There was an opinion in respect of the original voluntary disclosure scheme and a separate opinion in respect of the single premium investments scheme.

19

19. The respondent instructed solicitors Barry C. Galvin and Son who...

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2 cases
  • O'Brien v O'Brien
    • Ireland
    • High Court
    • 18 d2 Dezembro d2 2018
    ...the respondent. 39 In seeking to invoke the inherent jurisdiction of the court, the respondent relies upon the case of Ross v. Cohalan [2014] I.E.H.C. 686. On the facts of this case, the Revenue Commissioners were seeking to impose a penalty by reason the respondent having negligently subm......
  • Lee v Revenue Commisioners
    • Ireland
    • High Court
    • 31 d3 Janeiro d3 2018
    ...the course of submissions before me, any further argument on this point would now have to take account of the decision in Ross v Cohalan [2014] IEHC 686, (Unreported, High Court (White J), 15 May 2014) (at paras. 31-37). 35 The second limb of the appellant's submission was that the manner i......

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