A property developer made a €500,000 settlement with the Revenue Commissioners following an inquiry that showed his firm had used false invoices in a tax fraud that partly funded the purchase of house in the US, Dublin District Court heard yesterday.
Judge Patrick Brady yesterday fined businessman Mr Joe Flood and his firm Newpark Holdings Ltd, €6,250 each after they pleaded guilty to six charges of tax fraud under section 1078 of the Taxes Consolidation Act, 1997.
Mr Flood and the firm faced three charges of making incorrect returns, one of making a false VAT repayment claim, one of failing to deduct PAYE and social insurance, and of making an incorrect corporation tax return. They covered a period between 1998 and 2001.
Newpark Holdings is involved in the haulage business, and in letting warehouse space to other businesses. Its has assets of €6 million net of liabilities.
Tax inspector Mr John Flynn of the Revenue's investigations and prosecutions division, told the court that since the fraud was discovered, Mr Flood had made a settlement totalling €536,767 in tax, interest and penalties. Of this, €225,180 related to the charges he faced in court yesterday. Mr Flood's counsel, Mr Paddy Hunt SC, said his client was now "fully tax compliant".
In evidence, Mr Flynn said an audit of the business, conducted by inspector of taxes Mr Paul Gaffney found 13 false invoices involving 10 different suppliers for goods of €134,172. They were used to claim back €22,878 in taxes, including €10,906 in VAT.
The Revenue's inquiry showed that arising out of this, payments of €57,000 in cheques and drafts were made to Mr Flood and his brother, Mr Thomas Flood. This money was used to pay a deposit on a house in the US. The firm failed to deduct income tax and social insurance from these payments.
Mr Flynn told the court that Mr Gaffney conducted the audit after he became suspicious of a number of the invoices involved. Before beginning, he offered Mr Flood the opportunity to come clean, but he refused. Interviews with the suppliers named on the invoices revealed that the bills were false. Mr Flynn said he then interviewed Mr Flood under caution, but the accused refused to answer questions on legal advice. However, he said the defendant subsequently co-operated fully with the Revenue.
The businessman made the settlement offer to another tax inspector, Mr Barry Quinlan. Under cross-examination, Mr Flynn accepted that the accused had co-operated fully with the inquiry. The Revenue's solicitor, Mr Des Hickey, told the court that a summary conviction under section 1078 carried a maximum fine of €1,900 or a prison term of up to one year.
Mr Hunt asked that the settlement be taken into account in sentencing. He said the firm had borrowed €300,000 to make the payment, and stressed that Mr Flood was not likely to re-offend. Imposing the fines, Judge Brady said he had taken the €536,767 settlement into account.
