Court to hear €10m tax hearing

THE Commercial Court, which fast-tracks commercial disputes, has agreed to an unprecedented application by the Revenue Commissioners to hear an action aimed at the “effective collection” of €10 million from two car dealers over alleged unpaid taxes.

The Revenue said it wanted the Commercial Court to hear the case against brothers Pauric and John Kane because of the “very substantial liability” due and because the court could make orders resulting in the “effective collection” of the alleged unpaid tax.

Admitting the action yesterday, Mr Justice Peter Kelly remarked this was the first time in the court’s five and a half year history the Revenue had applied to bring proceedings. Perhaps it signalled “a new approach” by the Revenue, he said.

The judge said there was an issue whether the proceedings could properly be called commercial proceedings and he ruled the case did not involve a business dispute or construction of a business document.

However, he said he would admit the case under provisions of the rules that allow the court discretion to admit any other claims or counterclaims having regard to the commercial circumstances in which they arise.

He noted the alleged tax liability arose from business dealings of the defendants and that the trial of the issues raised could not be held as speedily in other divisions of the High Court.

The Revenue’s proceedings are against brothers Pauric and John (also known as Alex) Kane over their operation of businesses in Granard, Co Longford.

The Revenue has raised tax assessments against both brothers in which it sought €5.29m against Pauric Kane, and €4.9m against John Kane, over alleged underpayment of tax and VAT over several years. The Revenue claims both brothers “dragged out” appeals against those assessments until they had transferred assets to two companies and then withdrew those appeals.

Yesterday, Hugh Mohan, for the defendants, asked for time to allow him consider whether his side will challenge the constitutionality of legislation under which the tax assessments were raised.

Mr Mohan said his clients took issue with certain claims by Revenue in affidavits concerning events in recent days, including matters related to the alleged movement of vehicles.

Mr Mohan also said his clients disputed claims about “dragging out” appeals and said assets had been transferred to two companies – Prestige 4X4 Specialists Ltd and Kanes of Granard Ltd – for legitimate accounting and tax reasons.

Gary McCarthy, for the Revenue, said the Supreme Court had already determined the constitutionality of the legislative provisions and he was seeking summary judgment against both defendants for €10m.

He added he would be bringing another application to set aside the transfer of assets to the two companies.

Mr Justice Kelly noted that Mr Mohan had accepted any proposed constitutional challenge would be “a long shot”. However, as Revenue had in place account freezing orders and a receiver, he would allow the defendants until June 11 to consider their approach.

The judge also continued the orders freezing the defendants’ assets below €10m but directed applications for payments of wages and utilities could be made to the receiver where appropriate.