Accountant on trial over firm's tax return

A WATERFORD accountant yesterday became the first member of the accountancy profession to go on trial on a charge of knowingly aiding and abetting a company to make an incorrect tax return to the Revenue Commissioners.

John O'Donohue of Waterside House, Waterside, Co Waterford denies that he did knowingly around May 16th, 2001, aid and abet Paclene, a limited liability company, to deliver an incorrect return in relation to Value Added Tax for the period March/April 2001.

Opening the State's case against Mr O'Donohue at Waterford Circuit Criminal Court, prosecution barrister Noel Whelan BL said said the case revolved around Paclene's purchase on March 22nd, 2001, of a factory in Ennis from a company called Irish Polythene Industries (IPI) for a sum of £600,000 and its sale on the same day for £1.6 million to Galileo Enterprises.

It would be the State's case that Paclene was entitled to a 12 per cent VAT rebate of £75,000 on its £600,000 purchase of the premises and that it had a 12 per cent VAT liability of £200,000 on its subsequent £1.6 million sale of the premises, but none of these were declared in a VAT return.

Mr Whelan told the jury of six men and six women that the State would allege this VAT return filed by Paclene in respect of the period March/April 2001 and signed by Mr O'Donohue showed "Nil" returns in the spaces left for VAT rebate, VAT liability and the net balance.

Paclene and its principal Austin Brady - who have already been dealt with in another court - had left the Revenue Commissioners short some £120,000, said Mr Whelan, and the State alleges that Mr O'Donohue knowingly aided and abetted Paclene in this regard.

Prosecution witness Cathal O'Donovan, a solicitor for Paclene, told the court that he wrote on January 22nd, 2001, to Mr O'Donohue, who was acting as an accountant for Paclene, asking him if he believed the proceeds of the sale of the property to Galileo were subject to VAT.

Mr O'Donohue wrote back and said he would seek the advice of solicitors acting for the previous owners, IFI.

Mr O'Donovan said he later received a VAT invoice from solicitors acting for IPI for £75,000 and he made out a VAT invoice for £200,000 to Galileo for the purchase of the property, and Galileo paid over a total of £1.8 million - the £1.6 million price plus £200,000 VAT.

Cross-examined by Mr O'Donohoe's barrister, Alan Toal BL, Mr O'Donovan said that Mr Brady had told him he was not to tell Mr O'Donohue that the sale of Galileo was complete, but he had no idea why Mr Brady had so instructed him.

The court heard from the defence during cross-examination that Mr Brady wrote to Mr O'Donohue on January 26th, 2001, advising him he had been visited by Revenue officials and had learned he did not owe any VAT liabilities but was in fact owed "a fairly large amount".

The case continues.

This article appears in the print edition of the Irish Times