Courts toughen their stance on tax evasion
THE PUBLIC’S attitude to tax evasion has changed and so too has the attitude of the courts. It is no longer enough to admit a serious revenue offence and simply refund the exchequer. The prosecution of tax evasion will now almost certainly be met with the imposition of a jail sentence.
The change in judicial attitude to tax evasion first came to the public’s attention in March this year when a company director was sentenced in the Circuit Criminal Court to six years’ imprisonment for customs duty evasion.
However, the previous week the Court of Criminal Appeal delivered a judgment which was really the turning point in sentencing policy for both tax evasion and welfare fraud cases.
Paul Murray pleaded guilty to an elaborate welfare fraud committed over a six-year period. He was sentenced in the Circuit Criminal Court in July 2011 to 12½ years.
Although Murray’s sentence was reduced to nine years (with the final year suspended) on appeal, the Court of Criminal Appeal emphasised that “in the case of offences involving the public purse, deterrence plays an important value in the sentencing process”.
The court felt that such deterrence was “a necessary quid pro quo of social solidarity” and an assurance to compliant taxpayers that those who did not pay their fair share of tax would be punished.
The Murray judgment acknowledges that offences involving the loss of public money are not victimless crimes, but strike “at the heart of the principles of equity, equality of treatment and social solidarity on which the entire edifice of the taxation and social security systems lean”. This is especially so at a time of financial crisis and in circumstances where the Irish people have had to endure tax increases and budget cuts.
The Court of Criminal Appeal concluded that for offences which involved significant and systematic frauds on the public purse, sentencing courts should impose “immediate and appreciable” custodial sentences.
The sentencing courts have followed these guidelines. John Hughes, a used car dealer, was jailed in March for four years after pleading guilty to sample counts of failing to pay VAT between 2003 and 2006.
Hughes made a settlement with Revenue in relation to the unpaid tax, interest and penalties and had paid most of it back.
In sentencing Hughes, Judge Martin Nolan stated that offenders should not think that they could buy themselves out of a jail sentence.
In May, Barry McDonald was sentenced in Cork Circuit Criminal Court to three years’ imprisonment with the final year suspended after he pleaded guilty to 13 charges, including making incorrect VAT and corporation tax returns and failing to keep records.
A jury also convicted Derek Floyd in May of a €680,000 VAT fraud committed between January 2001 and October 2003. Floyd was sentenced by Judge Ray Fulham to six years with the final year suspended.
The guidance from the Court of Criminal Appeal is clear. Tax evasion will not be tolerated. The courts can impose significant jail terms upon those who are convicted of this crime.
Gráinne Duggan is a barrister specialising in tax law