Haughey gives papers to Revenue

The former Taoiseach, Mr Charles Haughey, has handed over extensive documentation concerning his financial affairs to the Revenue Commissioners.

He instructed the two firms which handled his finances over the years to co-operate with the Revenue investigation. The documentation, which was handed over last year, shows the amounts Mr Haughey spent for the period 1988 to 1997, and possibly further back.

Journals and supporting documentation show bills coming from Mr Haughey's secretary at Kinsealy, Co Dublin, and funds coming from the Ansbacher deposits to pay them. The amounts involved are understood to average about £300,000 per year yet the documentation may not necessarily lead to a new tax assessment being raised against the former Taoiseach.

Mr Haughey's books were handled by Haughey Boland (now part of Deloitte & Touche) from the 1960s up to 1991, and after that by a company called Business Enterprises Ltd. As well as the documentation being handed over, some of the professionals who dealt with Mr Haughey's account have been interviewed by Revenue staff.

A tax expert said that if the funds used to pay Mr Haughey's bills came from gifts from outside the jurisdiction, they may not be liable for Capital Gains Tax (gift tax). Nor would they be liable for income tax, according to the source. If the gifts were used to create income, however, such as bank interest, that would then be taxable.

Of the approximately £1.7 million which Mr Ben Dunne is now known to have given Mr Haughey in the period 1987 to 1992, more than £800,000 came from companies which are not legally part of the Dunnes group and are located outside the jurisdiction.

Gift tax plus interest may be liable on these amounts, according to the tax expert. He added that under the law, where the recipient of a gift does not or cannot pay the tax, the liability then falls to the donor of the gift.

"Haughey is lucky because he doesn't seem to have had hidden income. If his lifestyle is based on gifts from overseas, then he may be in the clear." However, the source said this did not seem to be the case with the former Fine Gael Minister, Mr Michael Lowry, as payments he received from Mr Ben Dunne were income and not gifts.

A gift-tax assessment believed to have been between £1.5 million and £2 million was successfully appealed by Mr Haughey last year and reduced to zero. It is understood his legal team argued successfully before the Appeals Commissioner, Mr Ronan Kelly, that in order for gift tax to be raised, the donor must be identified and this had not be done by the Revenue. The case is to be reheard in the Circuit Court, possibly in the next law term.

Counsel for the Revenue has said that owing to the "labyrinthine" paper trail involved in the Dunnes payments to Mr Haughey, it should not be "chastised" for failing to uncover them.