A tax scheme which "came adrift" was blamed yesterday by a Waterford builder for arrears that resulted in a settlement of nearly £2 million (€2.54 million) with the Revenue Commissioners.

Mr Noel Frisby said a Revenue audit of his company, Pineview Construction, covering an 11-year period, had found the scheme not to be tax compliant.

"We thought it was okay. They said it wasn't. That was the nuts and bolts of it."

In one of the biggest settlements of its kind, the company paid almost £1.8 million in arrears, interests and penalties to Revenue. A further £128,000 was paid personally by Mr Frisby, who is one of Waterford's best-known businessmen.

The amount paid by Pineview was made up of £1.25 million in interest and penalties, added to a base sum of £544,372 in tax arrears.

Of the total paid by Mr Frisby personally more than half, £72,713, was in interest and penalties. The Revenue audit covered a period from the mid-1980s up to 1996/97 and he had no outstanding tax difficulties, Mr Frisby stressed yesterday.

Pineview no longer traded and the settlement had "nothing to do" with the company he now ran, Noel Frisby Construction.

"All our current tax liabilities are completely up to date and the Revenue Commissioners will confirm that. We've put it behind us now and we're driving on.

"There was nothing for it but to pay up and be done with it," he said. "It gave me great pleasure," he added, "to be able to write a cheque of that size to the Revenue Commissioners and stay afloat."

Mr Frisby has been one of the most prolific builders in and around Waterford during the boom years in the construction industry. Large-scale residential developments his companies have been responsible for include Cherrymount, Templar's Hall, College Court, Grange Manor and Ardkeen Village.

Noel Frisby Construction is at present developing office and student accommodation on the Cork road in Waterford, as well as office space on the Dunmore road.

Residential buildings are the company's core business, however, and its promotional literature suggests it has been "Building quality homes for over 20 years".

It is currently constructing apartments near the old City & County Infirmary on John's Hill.

Mr Frisby's wife, Ms Stephanie Taheny, a former planning officer with Waterford Corporation, is also a director of the company.

Mr Frisby drew a distinction yesterday between Pineview and Noel Frisby Construction. The companies had "different directors", he said, and Pineview had not traded "for the last six or seven years". He acknowledged, however, that both he and Ms Taheny were directors of both companies.

"They're not fully the same (directors). I'm not commenting on that," he said.

In an annual return filed with the Companies Office on September 4th last, Mr Frisby and Ms Taheny are the only directors listed by Pinewood.

They are also the only named directors in a return filed by Noel Frisby Construction earlier this month. The tax scheme which had fallen foul of Revenue was a "complex matter", Mr Frisby said.

He had taken professional advice on it but the scheme "didn't work out".