Michael Lowry could face a new assessment of tax

Tipperary TD Michael Lowry has been saying for some time now that the mostly tax-related criminal charges against him make no sense given that he has been found to have no tax liability.

Yesterday the argument for the other side was given for the first time.

The court has heard from Patrick Treacy SC, for Lowry, that an income tax assessment for €516,000, including interest and penalties, had been raised against the politician at one stage, but was reduced to nil following a case taken to the Appeal Commissioners.

Remy Farrell SC, for the Director of Public Prosecutions, put a different complexion on the matter yesterday when he made it clear that a new assessment could yet be raised against Lowry, and that the charges Lowry was facing involved the possibility of jail for up to five years.

An inquiry by the Revenue Commissioners into Lowry and his refrigeration company, Garuda Ltd, began in 2013 following the publication of the so-called "Lowry Tapes" in the Sunday Independent.

The tapes seemingly record Lowry and Northern Ireland businessman Kevin Phelan discussing £250,000 (€372,000) that was lodged to the Isle of Man account of the Glebe Trust, in 2002.

The payment had not been revealed to the Moriarty tribunal which, in the early 2000s, was investigating links between Lowry and Phelan.

“I’m asking you, Kevin, for f**k’s sake, will you protect me just a small bit?” Lowry can be heard saying, before adding that he had never put the payment through his accounts.

Lowry has queried the reliability of the tapes but, as Farrell noted in court, he has not said clearly whether it was him on the tapes or not. Likewise with Phelan.

Lowry has said the money came from a Finnish company, Norpe OY, and was commission due to Garuda.

The diversion of the money to the Glebe Trust created income tax issues, the court has heard.

Farrell explained that the issue the Appeal Commissioners had to decide concerned how to treat the liability. The Appeal Commissioners, he said, very clearly found that Lowry had “misappropriated” the money from Garuda.

What they addressed was the discrete issue of whether it was right to treat money misappropriated by a company director as an emolument.

The commissioners decided no, but it still remained open to the Revenue to raise a new assessment, Farrell said, under a different category of income.

To present the Appeal Commissioners ruling as a vindication of Lowry’s position “beggars belief”, he said.

In 2007, Lowry told his accountant Neale O’Hanlon to put the €372,000 into the Garuda books for the 2006 year.

The associated corporation tax was then paid. Lowry did not explain the nature of the 2002 transaction.

“Surprisingly, the accountant didn’t ask, but that is another issue,” Farrell said.

Search warrants

In July 2013, the Revenue got search warrants for Lowry’s home in Holycross, Co Tipperary, as well as the Garuda offices and the offices of accountants Ecovis BBT Ltd and Denis O’Connor, at The Gables, Torquay Road, Foxrock, Dublin. Both had acted as accountants for Lowry and Garuda.

The Dublin search found bogus invoices generated to “cover up” what had happened in 2002, Farrell said.

Nothing was said about how the invoices came to be drafted. Farrell said that the focus of the charges involving Garuda, which concerned the alleged “wilful” filing of incorrect returns, were independent of any tax at issue.

The latter was an issue for consideration at sentencing if a conviction was secured.

The tapes, which for legal reasons may not feature in the evidence if a trial went ahead, contained “as good an admission of criminal wrongdoing as one would ever hope to find”, Farrell said. Lowry, he said, had been “extremely coy” about stating whether it was him on the tapes.

Farrell also noted that the politician had applied to the Sunday Independent to be given the tapes, under the data protection provisions.