Group yet to provide for DIRT liability

AIB has not yet made any provision against profits for its Deposit Interest Retention Tax liabilities and is not able to put a figure on the Revenue bill, according to group chief executive Mr Tom Mulcahy. Showing some irritation at DIRT questions yesterday, Mr Mulcahy commented "this is the most successful company in the history of the country and you are only interested in this".

Estimates of the eventual liability have ranged widely - from £35 million to more than £300 million.

Sources suggested that AIB's liability could be up to three times higher than it might otherwise be if the Revenue seeks back-tax, interest and penalties on accounts where there were mistakes in documentation as well as clearly bogus non-resident accounts.

In its financial statement AIB referred to a "further contingent liability" depending on whether the Revenue departs "from their previous practice in respect of documentation". From 1986 the Revenue did not seek to impose a liability for DIRT where all the documentation details were not completed but the account was that of a genuine non-resident, according to the statement.

Mr Mulcahy insisted that the Revenue Commissioners' audit of AIB's non-resident accounts over the 1986 to 1998 period was not yet completed. The audit started in April 1999.

But he said it was "well underway" and would take "weeks rather than months".

At this stage AIB did not have "the certainty that would allow us to name a figure", he said.

Until the audit and the negotiations with the Revenue were completed any figure on the liabilities would be purely "hypothetical", he commented. Asked if AIB was prepared to take legal action over its claimed agreement with Revenue for the period up to 1991, Mr Mulcahy said "until the process is complete and we see what's coming we will not make any decisions".

During the press conference, Mr Mulcahy appeared to suggest that figures in the July 1999 report of the Comptroller and Auditor General could give some indication of AIB's possible liability.

These figures show that Bank of Ireland had 74,888 non-resident accounts in its branch network and AIB had 88,096 accounts. On the basis that Bank of Ireland paid a DIRT, interest and penalties settlement of £30.5 million, AIB could have a liability of about £36 million. But estimating a liability on this basis could be highly inaccurate.

In its statement yesterday AIB said: "A wide range of uncertainties affect AIB's obligations in respect of DIRT. The outcome of a number of these would only be confirmed on uncertain future events not wholly within AIB's control."

The full text of the note relating to DIRT tax in the AIB accounts is available at www.ireland.com