Court told bureau sought taxes without statutory notice

The Criminal Assets Bureau instituted proceedings for collection of £300,000 taxes against a Scotsman living in Co Mayo without any statutory demand for payment having being made on that man, the High Court was told yesterday.

If the CAB was entitled to sue for alleged outstanding taxes before the 21/30-day appeal limit had expired and before any demand for payment on the taxpayer, that was an issue affecting all taxpayers, Dr Michael Forde SC submitted.

He asked Mr Justice O'Higgins to determine whether the CAB had such powers.

Counsel raised the preliminary issue in proceedings taken by the CAB against Mr Lindsay Craft (28), a native of Scotland, with an address at Clonkeen, Westport Road, Castlebar, Co Mayo, and his wife, Ms Claire McWatt. Mr Craft came from Scotland to Castlebar in 1994.

Mr Craft was arrested by the CAB on May 7th, 1998. At a subsequent court hearing the bureau claimed his alleged tax liabilities followed an investigation by its officers into his assets. A CAB officer stated his belief, based on confidential information the source of which he did not wish to reveal, that since arriving in Ireland Mr Craft had been involved in drug-trafficking.

Before Mr Craft's release on the night of May 8th, proceedings were commenced against him based on an assessment for income tax and VAT for some £300,000.

The assessment was made on May 7th. Mr Craft later sought to appeal the assessment, but the bureau rejected the appeal.

Also on May 8th, the CAB applied for and secured an order known as a Mareva order to prevent him and Ms McWatt from dealing with specified assets and reducing their assets in the State below £170,000.

Statutory demands for payment of the assessed tax liabilities of almost £300,000 were issued by the CAB on June 9th demanding immediate payment and stating that if payment was not made, the bureau intended to enforce recovery without further notice.

In court yesterday Dr Forde told the judge Mr Craft was not represented. Counsel said he was appearing for Ms McWatt.

The first issue which Mr Justice O'Higgins has been asked to decide is whether there was a cause of action in existence against Mr Craft on May 8th, 1998, in view of the fact that the assessment for tax was made the previous day and the statutory demand for payment of that tax was not made until June 9th, 1998.

A second issue arose in the event of the court finding there was a cause of action. This was whether the court had any jurisdiction at all to grant the Marevatype order issued against Mr Craft and Ms McWatt.

Dr Forde said the CAB could not take proceedings for recovery of taxes against a person on whom no statutory demand for tax had ever been made. Where a person was contractually indebted to another, proceedings to enforce that debt could not be brought until the circumstances giving rise to enforcement obtained.

He submitted that where a person had a statutory liability to pay money on demand, they must be given some reasonable opportunity to get the money and proffer payment before proceedings for recovery could be commenced.

The CAB was effectively estopped from taking enforcement proceedings until at least 21 days after May 7th, 1998, but had taken the proceedings on May 8th, 1998.

The hearing continues today.