Top builders’ scheme a misuse of tax reliefs

A SCHEME under which two directors of one of the country’s largest construction companies received Ir£600,000 (€760,000) in tax-free dividends was a tax avoidance scheme involving a misuse of export sales tax reliefs, the High Court ruled yesterday.

Mr Justice Thomas Smyth found that an arrangement under which Michael O’Flynn and John O’Flynn each received Ir£298,000 (€378,000) in January 1992 in the form of tax-free Export Sales Relief (ESR) dividends, funded by the write-off of a loan of Ir£650,000 (€850,000) by their company, O’Flynn Construction Company Ltd, was a misuse of the reliefs.

Justice Smyth disagreed with a decision of the Appeals Commissioners of the Revenue Commissioners that the transaction was not a tax avoidance transaction. He was delivering his reserved decision on a challenge by the Revenue Commissioners to that Appeals Commissioners decision of April 2000.