A tax bill for about €150 million, mainly arising from unpaid income tax owed by the former Anglo Irish Bank, is likely to be appealed by the special liquidators to the Irish Bank Resolution Corporation, the State-owned entity into which Anglo was subsumed.
The massive tax bill, thought to be one of the largest ever submitted to a State- owned body, arises in the main from the interpretation of rules in relation to income tax and straddles the period before and after the former bank was nationalised.
The bill relates to both salaries and one-off special bonuses to senior executives in the bank.
The treatment of the payments was reviewed following the appointment of special liquidators Kieran Wallace and Eamonn Richardson, both of KPMG, to the IBRC in February 2013.
Challenge
A voluntary disclosure to the Revenue led to a reassessment of how PAYE and other matters were treated in certain instances, leading, in turn, to the huge tax bill to the IBRC. However it is now likely that the bill will be challenged.
An appeal to the Revenue Commissioners would mean that a decision on the matter would be deferred for years, given the waiting times for appeals that apply.
The payment of the bill – if it occurred – would cut the final proceeds of the liquidation. One effect of this would be to leave less money for bondholders arising out of the liquidation of the IBRC.
After other creditors, including the State, are paid money they are owed, a group of junior bondholders are due to be paid out of any remaining surplus.
In total this group, which objected to a move by the State-owned bank to sharply reduce what they would be paid, has a claim of around €280 million.
Audit by Revenue
The Revenue conducted an audit of the bank in 2009 and some of the issues arising in the recent tax bill are understood to relate back to then, and to taxes other than PAYE, though the bulk of the bill is understood to relate to income tax.
The collapse of Anglo Irish Bank cost the State almost €30 billion.
Anglo was subsequently merged with the former Irish Nationwide into the IBRC, which was liquidated in February 2013.
The tax issue is also likely to be examined by the Commission of Inquiry into transactions into IBRC, which the Government established after a string of controversies relating to asset sales before the bank was liquidated, particularly the sale of Siteserv to a company owned by businessman Denis O’Brien.
The commission will mainly look at sales transactions and the treatment of key borrowers, but can also examine any other issues which it feels are relevant to its terms of reference.
