High Court finds business man and former wife have no arguable defence for failure to pay VAT



The High Court has granted summary judgment in favour of the Collector General for the Revenue Commissioner, who sought a number of reliefs due to the failure of a couple to pay VAT of over €800,000.00.

The Commissioner Michael Gladney sought (1) €822,765.41 due by the defendants George Raymond and Ruth Raymond to the Central Fund; (2) interest pursuant to the Courts Act 1981; (3) interest at the statutory rate of 0.0274% for each day or part of a day in relation to VAT from 19th November, 2012, until judgment prior payment; and (4) certain ancillary relief.

The monies sought by Mr Gladney were due ultimately as a result of default by the defendants on certain VAT payments. The liability outstanding had been determined on the basis of returns filed by or on behalf of the defendants in relation to the sale of six properties, which returns were final and conclusive in accordance with the Tax Acts.

In or around the time that the defendants filed the returns, Mr Raymond signed an ‘Inability to Pay’ document which acknowledged and accepted the Revenue Commissioners’ claim for tax undercharges and statutory interest.

Despite acknowledging the claim however, Mr Raymond sought to advance a number of defences, namely 1) that prior to the within proceedings, he and his wife have always been tax compliant; 2) that proceedings alleging, inter alia, professional negligence have been commenced by the defendants against certain certified accountants to whom the defendants entrusted the care of their tax affairs, and that a stay should be placed on the proceedings pending the conclusion of those professional negligence proceedings; 3) that the Revenue Commissions were guilty of criminality and misfeasance.

In relation to the first defence, the Court noted that while it may be the case that the defendants had complied with all Revenue liability for the last thirty years, as the defendants alleged, but that such compliance could not constitute a defence to the present event of tax default.

In relation to the second defence, the Court noted s.5(1)(a) and s.76 of the Value-Added Tax Consolidation Act 2010, which appeared to the Court to provide that the focus of revenue collection and revenue enforcement proceedings must first and foremost be on the taxable person and that person’s actions, and not, inter alia, such liabilities as a third party may or may not have towards that taxable person.

The Court did not consider it appropriate that in a tripartite situation, with tax defaulters in one corner, a number of persons claimed to have been professionally negligent in a second corner, and the Revenue Commissioners in the third corner, the Revenue Commissioners as the innocent party should have to wait for judgment in their favour, in order that a dispute, which may or may not be of substance, might be litigated between the other parties.

In relation to the third defence, the Court noted that Mr Raymond had made serious allegations against the Revenue Commissioners and officials, accusing them of “deliberate acts of criminality”, “theft”, “fraud”, collusion in a “tax scam”, and other offences.

The Court found that there was not a scintilla of evidence to support such assertions.

Turning to the applicable law, the Court observed that summary judgment could only be given where the defendant has no arguable case, following Aer Rianta c.p.t. v. Ryanair Ltd.  4 I.R. 607 and Harrisrange Limited. v. Duncan  4 I.R. 1, 7.

The Court expressed sympathy for the financial predicament the defendants were in.

However, as a matter of law it had to conclude that “the defendants have no case; there is no issue to be tried; and the defendants have failed to disclose even an arguable defence.”

The Court therefore declined to grant a stay, declined to send the matter to a plenary hearing, and granted Mr Gladney the reliefs he sought.

  • by Rachel Killean for Irish Legal News