In an important decision curbing the tax-collecting practices of the Criminal Assets Bureau, the Supreme Court has overturned a judgment for £1.77 million in alleged outstanding taxes granted to CAB against a Dublin man
The five-judge Supreme Court unanimously upheld Mr Seán Hunt's appeal against the High Court judgment which consisted of £1.29 million in income tax for the years 1988/89 to 1997/98 and £481,484 for VAT during the same period.
It held the bureau was not entitled to seek such judgment in circumstances where tax assessments in relation to Mr Hunt were not, at the time the proceedings were taken, final and conclusive under the tax legislation and because no prior demand for payment of the tax alleged to be due had been made by CAB. Mr Hunt had not exhausted his right to appeal against the assessments to the Revenue Appeals Commissioners. The court also held that bank statements related to accounts in the name of Mr Hunt's wife, Ms osaleen Hunt, also known as Jean Hunt and Jean Maher, which accounts CAB alleged Mr Hunt to be the beneficial owner of, were not admissible in evidence as they had not been properly proven.
It did not address issues regarding the alleged unconstitutionality of tax appeal provisions as the High Court had not ruled on those.
CAB began inquiries in 1998 into the affairs of Mr Hunt, described as a businessman, formerly of Ramilles Road, Ballyfermot, but now understood to be living in Spain, after it received information that Mr Hunt was involved in the illegal importation of tobacco products and fireworks and their subsequent sale on the streets.
It transpired Mr Hunt had not made any tax returns for at least 10 years and his wife had been claiming social-welfare payments from 1990 to 1995, with Mr Hunt named as a dependant. Financial accounts obtained by CAB disclosed that, in 1988-98, some £3 million had passed through various bank accounts in the names of Mr and Ms Hunt.
CAB raised assessments on Mr Hunt for income tax and VAT totalling £1.77 million and took legal proceedings. Injunctions were granted restraining the Hunts from reducing their assets below the sum of £1.77 million. In June 2001, the High Court granted judgment in that sum to CAB against the Hunts, who appealed to the Supreme Court.
In its reserved judgment yesterday, the Supreme Court upheld their appeal.
The court rejected CAB's argument that, although there was no final and conclusive assessment, the taxes were "due" and that the High Court, through exercising its inherent jurisdiction, could determine the amount of tax due by Mr Hunt.
The Chief Justice, Mr Justice Keane, said that, if CAB's submission was correct, it would have the "surprising" and "anomalous" consequence that a diligent taxpayer who had made a tax return and paid preliminary tax could be subjected to High Court proceedings. That taxpayer would also be deprived, at least for a period, of their statutory right to dispute the Revenue's claim as to the amount owed.
If the High Court retained jurisdiction in circumstances where a valid appeal against a tax assessment had been lodged, this would involve an allocation of jurisdiction which was "overlapping and unworkable".
CAB's argument that the High Court retains an inherent jurisdiction to determine a person's tax liability, notwithstanding the existence of machinery for assessment and appeal under the relevant legislation, was "not well founded".
The Chief Justice said it was clearly the intention of the Oireachtas, when enacting the elaborate procedures for the determination of a taxpayer's liability by assessment and appeal to the Appeals Commissioners, accompanied by a right of appeal to the Circuit Court and provision for the High Court to determine questions of law, "to provide an exclusive machinery for the ascertainment of a taxpayer's liability".
In the Hunts' case, it could be inferred CAB had initiated the High Court proceedings so as to secure the freezing of their assets while the extent of their tax liabilities was determined.
However, he disagreed with the Hunts' claim that the proceedings were in excess of the bureau's powers because there was no evidence before the High Court that the assets in question represented the proceeds of crime. One of CAB's functions was to ensure the proceeds of "suspected" criminal activity were liable to tax and there was ample evidence that those suspicions were reasonably entertained. He also described as "wholly unfounded" the Hunts' claim that the raising of the tax assessments against them was arbitrary.
