Haughey ‘put home at risk’ to pay €5m tax bill

FORMER Taoiseach Charles J Haughey put his beloved Georgian mansion Abbeville on the line when settling his tax bill with the Revenue Commissioners for €5 million, the Moriarty Tribunal heard yesterday.

Principal officer Brian McCabe said: "I could have actually sold his house and property after two years, under the power of attorney that was given me."

Settlement was reached on March 18, 2003, with Mr Haughey's tax agents.

They included former Revenue official Paul Moore and forensic accountant Des Peelo.

On December 10, 1997, Mr McCabe sent an official notice to Mr Haughey demanding details of all taxable gifts or inheritances he had received and gave Mr Haughey four months to respond. Despite promises from the tax agents, the deadline passed and no reply was ever received.

In March 2003, Mr Haughey agreed to settle his tax affairs for €5m (£3.94m).

The tribunal is currently hearing evidence about how Revenue conducted its investigation into Mr Haughey's tax affairs after it first emerged in the McCracken Tribunal in 1997 he had been funded by a number of businessmen, including former supermarket chief Ben Dunne.

In August 2000, Mr Haughey made an interim tax payment of €1.2m.

Based on disclosures to the Moriarty Tribunal, Revenue calculated Mr Haughey got payments of €10.8m (£8.5m) over a 20-year period to 1997.

He said he got no gifts after 1997 and now lived on borrowings and his pensions.

By 2002, Revenue realised there appeared to be a huge gap between Mr Haughey's declared income and his level of expenditure over many years.

Tax officials estimated Mr Haughey's living expenses alone ran at an annual average of £125,000 between 1980 and 1984. At the time, a Taoiseach's salary was less than £47,000.

Irish tax law prevented Revenue from pursuing Mr Haughey under the income tax code because they would have to show the source of his income which they could not, as the payments he received were not sourced from a profession, trade or provision of services, or from rents on property.

Faced with a dilemma, they went after Mr Haughey under gift tax legislation. Because both parties opted for tax settlement, a 100% cap was put on the outstanding interest and a £60,000 penalty for failing to file tax returns over 20 years was included in the overall bill.

The tribunal resumes on Tuesday.

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