Revenue takes £10m case against car dealers

THE COMMERCIAL Court has agreed to an unprecedented application by the Revenue Commissioners to hear an action aimed at the “effective collection” of some €10 million from two car dealers over alleged unpaid taxes.

The Revenue said it wanted the Commercial Court to hear the case against brothers Pauric and John Kane because of the “very substantial liability” due and because the Commercial Court could make orders resulting in the “effective collection” of the alleged unpaid tax.

If the matter was pursued in the High Court, it could be the end of this year before the Revenue secured the orders sought, it added.

When admitting the action yesterday, Mr Justice Peter Kelly remarked this was the first time in the Commercial Court’s five and a half year history that the Revenue had applied to bring proceedings in the court. Perhaps the move signalled “a new approach” by the Revenue, he said.

The judge said there was an issue as to whether the Revenue’s proceedings could properly be called commercial proceedings and he ruled the case did not involve a business dispute or construction of a business document.

However, he said he would admit the case under provisions of the rules governing the Commercial Court which allow the court discretion to admit any other claims or counter claims having regard to the commercial circumstances in which they arise.

He noted the alleged tax liability arose from business dealings of the defendants and also noted the trial of the issues raised could not be held as speedily in other divisions of the High Court. He further noted the defendants had not objected to the case being heard in the Commercial Court.

The Revenue’s proceedings are against brothers Pauric and John (also known as Alex) Kane over their operation of businesses in Granard, Co Longford, selling Special Utility Vehicles.

The Revenue has raised tax assessments against both brothers in which it sought €5.29 million against Pauric Kane and €4.9 million against John Kane over alleged underpayment of tax and VAT over several years. The Revenue claims both brothers “dragged out” appeals against those assessments until they had transferred assets to two companies and then withdrew those appeals.

Yesterday, Hugh Mohan SC, for the defendants, asked for time to allow him consider whether his side will challenge the constitutionality of legislation under which the tax assessments were raised. His clients had fully co-operated with a receiver appointed by the receiver to their businesses and were anxious to keep the businesses operating, counsel added.

Mr Mohan said his clients also took issue with certain claims by the Revenue in affidavits concerning events at the premises in recent days, including matters related to alleged movement of vehicles.

Mr Mohan also said his clients disputed the Revenue claims about “dragging out” appeals and contended assets had been transferred to two companies – Prestige 4 X 4 Specialists Ltd and Kanes of Granard Ltd – for legitimate accounting and tax reasons.

Both those companies also considered themselves bound by the court’s order freezing assets.

Gary McCarthy, for the Revenue, said the Supreme Court had already determined the constitutionality of the legislative provisions in question and he was seeking summary judgment against both defendants for a total of €10 million. Counsel added he would be bringing another application to set aside the transfer of assets to the two companies referred to.

Mr Justice Kelly noted, given the Supreme Court decision referred to, Mr Mohan had accepted any proposed constitutional challenge to the tax provisions would be “a long shot”. However, as the Revenue had in place account freezing orders and a receiver, he would allow the defendants time to June 11th next to consider their approach.

The judge also continued the orders freezing the defendants’ assets below €10 million but directed applications for payments of wages and utilities could be made to the receiver where appropriate, and up to a maximum of €10,000 for both defendants.

The judge told Mr Mohan there would be “difficulties” if there was any repetition of an alleged incident between Alex Kane and a security officer. The judge was referring to allegations by a security firm retained by the receiver at the Granard premises that security men on duty last Saturday night were offered an inducement by Alex Kane to vacate the premises for a time.

The court has also adjourned to June 11th an application by Carhill Car Sales, Coleraine, Co Derry, in relation to securing five vehicles on the Kanes’ premises. The Revenue has alleged Carhill was intimately involved with a scheme of evasion of tax by the Kanes.